ASX:AS1 Appendix 4E – Preliminary Final Report Under ASX ... · Angel Seafood Holdings Ltd (ACN...
Transcript of ASX:AS1 Appendix 4E – Preliminary Final Report Under ASX ... · Angel Seafood Holdings Ltd (ACN...
Angel Seafood Holdings Ltd (ACN 615 035 366) angelseafood.com.au 48 Proper Bay Road, Port Lincoln SA 5606 (ASX: AS1)
ASX:AS1 Appendix 4E – Preliminary Final Report Under ASX listing Rule 4.3A
_________________________________________________________ RESULTS FOR ANNOUNCEMENT TO THE MARKET
Reporting Period: Financial year ended 30 June 2019
Previous Corresponding Period: Financial year ended 30 June 2018
$A Revenues from ordinary activities Up 193% to 4,271,916 Profit from ordinary activities after tax attributable to members Up 127% to 305,377 Profit for the period attributable to members Up 127% to 305,377
Dividends: Amount per security
Franked amount per security
Reporting Period Final dividend nil nil Interim dividend nil nil
Previous Corresponding period Final dividend nil nil Interim dividend nil nil
Record date for determining entitlements to the dividends Not applicable
Net Tangible Asset (NTA) Backing: NTA per security Net Assets per security (including Oyster Leases – classed as intangible assets under the accounting standards)
30 June 2019 $0.043 $0.093
30 June 2018 $0.067 $0.088
Earnings per Share (EPS): Basic EPS Diluted EPS
30 June 2019 $0.002 $0.002
30 June 2018 ($0.012) ($0.011)
Notes: This report is based on the audited Annual Report accompanying this Appendix 4E. This report and the accounts on which it is based use the same accounting policies. There are no entities over which control was gained or lost during the period. Angel Seafood Holdings Limited does not have any interests in associates or joint ventures, other than as disclosed in the Annual Report. All documents comprise the information required by Listing Rule 4.3A.
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ANGEL SEAFOOD HOLDINGS LIMITED ACN 615 035 366
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2019
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Contents
CORPORATE DIRECTORY
DIRECTORS Tim Goldsmith (Non-Executive Chairman) Isaac (Zac) Halman (Executive Director, Chief Executive Officer and Founder) Michael Porter (Non-Executive Director) Ashley Roff (Non-Executive Director)
COMPANY SECRETARY Christine Manuel
REGISTERED OFFICE 48 Proper Bay Road Port Lincoln SA 5606
SHARE REGISTRY Computershare Investor Services – Australia Level 5, 115 Grenfell Street Adelaide SA 5000 Website: www.computershare.com
AUDITORS William Buck Chartered Accountants Level 6 211 Victoria Square Adelaide SA 5000
STOCK EXCHANGE LISTING Australian Securities Exchanges (ASX Code: AS1)
Contents Page
Chairman’s letter 1
CEO Overview 2
Directors Report 3
Remuneration Report 14
Auditors Independence declaration 34
Independent Auditor’s Report 35
Financial Statements 38
Directors’ Declaration 90
Additional ASX Information 91
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Angel Seafood Holdings Ltd (ACN 615 035 366) - Chairman's Letter
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 1
Chairman’s Letter
Dear Shareholders,
It is with great pleasure that we present to you our financial results for the full year ended 30 June 2019 (FY19). FY19 was a very successful year for Angel Seafood, with the Company growing significantly over the period to become a much larger and stronger business. A substantial capital investment program was executed methodically that is now starting to provide benefits through economies of scale and operational efficiencies.
This time last year there were some challenges in the oyster industry, with the knock-on effect of POMS in Tasmania creating shortages in supply of spat. Over this time Angel continued to invest in the business and pursue spat supply. I am pleased to say that the industry is now through this challenging period, and Angel has benefited over the financial year from its investment program and having high quality oysters ready to sell.
Angel has grown across all metrics over the year. It has acquired an additional 15 hectares of high quality water to increase the Company’s water holdings, it has grown its infrastructure to enable the production of 5.3 million oysters over the year, up from 1.9 million last year, and revenue and cash flows were up substantially.
Angel’s brand and reputation as Australia’s and the Southern Hemisphere’s largest sustainable and organically certified pacific oyster producer has meant there has been continued strong demand for Angel’s oysters. In addition, over the year Angel commissioned an AQIS accredited export facility which saw the first live oysters successfully exported to Hong Kong. This was a real milestone for Angel, as the export market represents a key part of Angel’s long term growth strategy and a significant opportunity.
I would like to take this opportunity to thank CEO Zac Halman, and his dedicated team, for their hard work over the year, and congratulate them for delivering on the Company’s goals. Importantly, they have built a solid foundation for further sustainable growth into FY20 and beyond.
I would also like to thank our shareholders for their ongoing support, and look forward to sharing the growth journey with them.
Tim Goldsmith Chairman
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Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 2
Angel Seafood Holdings Ltd (ACN 615 035 366) - CEO Overview
CEO Overview
The financial year ended 30 June 2019 was period of significant progress for the Company, driven by a substantial investment program that built considerable scale into the business. We have also invested into our team, which is largely responsible for our growing success.
FY19 included a number of significant highlights for Angel: • Record oyster production of 5.3 million oysters, driven by increased water holdings• Revenue growth of 192% to $4.3 million, driven by higher production and strong oyster pricing• Commissioned an AQIS accredited export facility and have begun repeat export sales.• Increased quality water holdings and recommissioned with Angel IP, which increased holding capacity
up to 20 million oysters and finishing capacity up to 9 million oysters• Maiden reported Net Profit Before Tax (since listing) of $305,377• Generated a positive operating cash flow for FY191
Angel is operating in a very attractive market where demand for oysters continues to outstrip supply. Whilst the previous challenges with respect to spat supply have now subsided, we are still seeing close to record prices in the domestic market, we are very thankful for the long-term support of our customers as we continue to grow market share.
In addition to increasing our water holdings, we also invested heavily into our infrastructure so that we can handle and process the growth in oyster production. This has meant large upgrades to water lease infrastructure, investment in larger scale boats, the commissioning of the AQIS accredited export facility, as well as building our team with new expertise and capabilities. This investment program has created scale benefits in the business, which are now starting to flow through to improve margins.
A key milestone for Angel over FY19 was the entry into the export market in the fourth quarter. The export market is a key part of Angel’s long-term strategy as we continue to grow our production levels, and this channel also offers attractive timing given peak global demand coincides with peak conditions for our oysters.
Although the price achieved for the first exports were not at a large premium to domestic sales, we are focused on building long term relationships with our customers and expanding these markets and volumes. We believe our sustainable and organic certified status will deliver higher prices over time, particularly in the Asian market.
From a financial viewpoint, FY19 was a year of records – record production, record revenue which was up 192%, as well as the achievement of positive operating cash flows1. The Company remains fully funded for its growth plans, both through access to debt and from operating cash flows.
I am very thankful for the team’s efforts in delivering the successful outcomes of FY19. The team has executed our growth plan methodically, which positions Angel very strongly for sustainable long-term growth. With our water leases fully stocked with healthy oysters, funding in place to support our growth and scale benefits now being achieved, we look forward to FY20 with confidence.
I would like to thank the Board, the Angel team, stakeholders and shareholders for the past year of support, and look forward to sharing continued growth and success together.
Zac Halman Founder and CEO
1 Adjusted operating cash flow – reported operating cash flow adjusted for the Hank acquisition and net change in working capital balances
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 3
Directors’ Report
The Directors of Angel Seafood Holdings Ltd (Company or Angel) present their report, together with the financial statements of the Company and its controlled entities (the Group) for the financial year ended 30 June 2019.
Directors
The following persons were directors of the Company during the financial year and to the date of this report:
Tim Goldsmith Non-executive Chairman Michael Porter Non-executive Director Ashley Roff Non-executive Director Isaac Halman Executive Director, Chief Executive Officer and Company Founder
Directors have been in office since the start of the financial period to the date of this report unless otherwise stated.
Information Relating to Directors and Company Secretary
Details of each Director’s experience, qualifications and responsibilities are set out below. This includes information on other listed company directorships in the last three years.
Name and qualification Experience and responsibilities Tim Goldsmith BA(Hons)
Independent Non-Executive Chairman appointed 21 February 2018. Member of Audit and Risk Committee.
Tim was appointed Chairman effective from the date of initial ASX listing of the Company.
Tim is currently CEO of Rincon Ltd, a lithium development company and is also Chairman of ASX listed Hazer Group since July 2017. Tim was appointed a Non-executive Director of Costa Group from 1 September 2018. He was Chairman of Kopore Metals Ltd from November 2017 to February 2018.
Until 30 June 2017, Tim was a partner at PricewaterhouseCoopers. He was a partner for more than 20 years and dealt with many companies throughout the world. He was particularly focused on China and worked extensively in the mining sector.
Michael Porter BBS (Enterprise Development), Grad Cert (Change Management), GAICD
Non-executive Chairman appointed 2 December 2016 – 1 March 2017 Non-executive Director 1 March 2017 – 22 August 2017 and since 21 February 2018 Executive Chairman 22 August 2017 – 21 February 2018 Member of the Audit and Risk Committee Director of subsidiary companies Angel Seafood Infrastructure Pty Ltd and Angel Oysters Australia Pty Ltd
Michael has extensive experience in the Agricultural sector where he was the CEO of SQP Co-operative for almost four years. He owns dry land farming interests in Victoria’s Western District near Ballarat. He has particular interest in soil re-generation and making the best use of our limited resources, such as water. Other Board positions include being a Non-executive Director of ASX listed Murray River Organics Ltd from 3 April 2018. He is also a Board Member of the Wimmera Catchment Management Authority (a Victorian State Government appointment) and past Chairman of the Audit Advisory Committee for the City of Ballarat. Michael is also an Active Reservist where he holds the rank of Commander in the Royal Australian Naval Reserve.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 4
Name and qualification Experience and responsibilities Ashley Roff LLM (Syd) (Hons2), FGIA
Independent Non-executive Director appointed 21 February 2018 Chairman of the Audit and Risk Committee
Ashley is a senior and trusted legal, compliance and governance advisor at board and executive leadership levels with extensive commercial experience across industries as diverse as agriculture, consumer beverages, internet marketing and finance. In 2005 he was responsible, as General Counsel, for the public compliance listing of ABB Grain Ltd, and served as Company Secretary 2005-09. During this time, he headed ABB’s Risk Management division and was recognised as Chartered Secretaries Australia 2007 Corporate Governance Professional of the Year (sub-ASX 100 Companies). After ABB was acquired by Viterra Ltd, a Canadian company, he was responsible 2009-2010 for liaising with ASX on Viterra’s CHESS Depositary Interests (CDI) program. General Counsel and Company Secretary of Emerald Grain Pty Ltd 2011-15. Principal of Adelaide-based law firm Brightman Legal since 2016. No other public company directorships.
Isaac (Zac) Halman
Chief Executive Officer since 1 July 2018 (previous title Executive Operations Director 1 May 2017 – 30 June 2018) Director appointed 27 September 2016 Director of subsidiary companies Angel Seafood Infrastructure Pty Ltd and Angel Oysters Australia Pty Ltd
Zac is the founder of the Company and has been successfully farming oysters for close to a decade in South Australia’s Eyre Peninsula. He has successfully grown a team and business which is one of only three certified sustainable oyster producers in the world who have been certified by “Friends of the Sea” and is also one of only two certified organic oyster producers in Australia who have been certified by NASAA. Zac applies strict budgetary and quality controls and through his guidance and expertise has grown the oyster business, now owned by the Company, exponentially. Before oyster farming Zac has been active in the agriculture industry, specialising in broad acre and stock agricultural contracting. Mr Halman holds no other public company directorships.
Company Secretary
Ms Christine Manuel BMus, GradDipACG (Applied Corporate Governance), DipCD (Corporate Director), DipInvRel (Investor Relations), FGIA, FCIS, MAICD, MAITD, AAIPM, a Chartered Company Secretary, was appointed Company Secretary on 20 September 2017. Ms Manuel is an experienced Company Secretary and corporate governance professional. Her background includes Company Secretary and executive roles in a range of listed and unlisted entities over more than 20 years. Ms Manuel is SA/NT State Council Chair and a Non-executive Director of the Governance Institute of Australia and regularly facilitates Governance Institute training courses.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 5
Principal activities
Angel Seafood Holdings Ltd is an Australian producer, manufacturer, marketer, and seller of certified organic and sustainable oysters. No significant changes occurred in the nature of the principal activities during the financial year.
Company Overview
Angel is Australia’s largest producer of fresh, clean, green, certified organic and sustainable oysters. The Company is Organically certified through internationally recognised National Association for Sustainable Agriculture, Australia (NASAA) and sustainably certified with the internationally recognised ‘Friends of The Sea’ organisation.
The Company runs a multi-bay strategy with nursery and oyster grow out operations in Cowell with a holding capacity of over 20 million oysters, and final conditioning in the internationally acclaimed Coffin Bay with a capacity to finish up to 10 million oysters per year. The Company also holds water leases in Haslam, currently being used for storage of excess stocks. This diversification in geographic operating locations provides disease risk mitigation and allows the Company to optimise oyster performance at each stage of the growth cycle.
The Company sells to domestic customers direct from Coffin Bay and process the oysters for export out of its purpose built and fully AQIS accredited export site in Port Lincoln.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 6
Review of Operations
The financial year ended 30 June 2019 was a significant year for the growth of Angel Seafood. The Company grew substantially, both operationally and in terms of financial outcomes, which was driven by the Company’s execution of its growth strategy.
Key operational achievements for Angel over FY19 included:
a. Acquired additional high-quality water which increased growing capacity to 20 million oysters per annum,with the ability to condition over 9 million oysters per annum
b. Port Lincoln Export Facility was commissioned, which saw exports to Hong Kong commencing in Q4; it wasalso extended to include a new Head Office for the Company
c. Investments that built scale in operations and efficiencies, including the completion of enhancements to theCoffin Bay processing facility, completion and commissioning of the Cowell processing facility, the purchaseof a new big vessel (“Angel 6”), and a number of infrastructure refurbishments to leases
d. Accessed increased spat supply that has allowed leases to remain fully stockede. Improvements in nursery operations which contributed to reduced mortality rates in all stocksf. Successful extension to the NAB Debt Facility by $1.2 million to $4 million, providing the Company with added
flexibility to execute against its growth strategyg. Strengthening the Angel team through key hires, including the appointment of Chief Financial Officer, Simba
Matute, and Daniel Wicks, as Head of Operations, with a special focus on nursery operations.
Angel has utilised capital effectively and efficiently through a mixture of cash reserves and debt facilities to fund the Company’s investment program and remains fully funded for its growth plans going forward.
Operating and financial review
Operating Results
The Group made a consolidated profit after tax of $305,377 for the year ended 30 June 2019 (FY19) (2018: Loss after tax of $1,142,629).
Revenue from oyster sales FY19 was $4,271,916 (2018: $1,458,916); a 193% increase on revenue for FY18. The increase in revenue is a result of the increase in sales volume from 1.9 million units in FY18 to 5.3 million units in FY19 following the capital expansion program during the year which included acquisition of new water leases in Coffin Bay and Cowell, construction of new infrastructure and purchase of new equipment to increase scale in the business. The company commenced exports in the last quarter of the year and realised revenue of $56,460 from export sales (2018: Nil).
The consolidated results include Other Income of $2,351,453 (2018: $1,680,008); comprising a fair value adjustment on biological stock of $1,868,307 (2018: $852,025), representing the growth in oysters held by the Company; and a Research and Development (R&D) tax incentive of $475,698 (2018: Nil) in relation to qualifying research and development activities conducted by the company as it continues to innovate and lead the transformation of the oyster industry.
Total expenses for the year were $6,317,992 (2018: $4,446,702), and included the following: - Cost of biological stock (oysters) sold during the period $888,998 (2018: $689,320). There was a reduction in the
average cost per unit sold in the current year as more product from spat purchases is now maturing to saleablesizes. In FY18; most sales were from on grown purchases due to spat shortages in previous periods.
- Employee benefits comprising payroll costs and oncosts of $1,882,535 (2018: $1,375,402), and non-cash share-based payments of $880,968 (2018: $286,926) representing the amortisation of shares, performance rights andoptions awarded to employees.
- Depreciation and amortisation expense of $688,911 ($2018: 360,959) with the increase driven by the increase in the asset base following the capital expansion program.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 7
- Other expenses of $1,795,451 (2018: $1,289,553) comprising other production costs such as repairs andmaintenance, freight, consultancy costs as well as administration and corporate costs. The increase in otherexpenses is a result of the general growth in the business during the year.
Tax expense for the year was nil, with the company recognising a portion of previously unrecognised tax losses to offset a deferred tax expense and deferred tax liability (2018: $161,349)
There was no Other comprehensive income for the year (2018: Nil)
Full details in relation to the results of the Company are disclosed in the consolidated financial statements and accompanying notes.
Financial Position
The Group total assets increased by 54% to $18,885,243 as at 30 June 2019 (2018: $12,274,267), driven by the following key changes:
- Intangible assets, comprising mainly of oyster leases increased to $6,580,356 (2018: $2,749,222) followingacquisitions of oyster leases in Cowell and Coffin Bay during FY19. This resulted in the Group’s holding capacityin grow out areas increasing to over 20 million oysters and finishing capacity in Coffin Bay increasing toapproximately 9 million oysters per annum.
- Property, plant and equipment increased to $7,038,786 (2018: $3,411,268) driven by construction of newinfrastructure for new oyster leases and purchases of new assets to increase operating capacity of the growingbusiness.
- Biological assets increased from $4,156,869 (2018: $1,462,453) during FY19, representing an increase involume of stock on hand enabled the increase in holding capacity, as well as growth of the biological stock over the period.
- Cash decreased from $3,957,345 to a net overdraft balance of ($937,562) (refer below).
The above key movement in assets were funded by a combination of the Group’s cash resources, bank finance, vendor financing (deferred payment terms) and leasing arrangements. The following were the key sources of funding for the group as at 30 June 2019 and for the year then ended:
- The Group’s net cash position decreased during the period from $3,957,345 at the beginning of the year, toclose with an overdraft balance of ($937,562). The Group has a working capital facility of $2 million withNational Australia Bank (NAB).
- The group obtained a 3-year revolving loan facility of $2 million from NAB to fund its Business Expansion. As at30 June 2019, $1,941,145 of the facility was drawn down.
- Vendor finance liabilities were $588,931 (2018: $626,730) representing deferred payments for the purchasesof oyster leases and related infrastructure during FY19.
- Lease liabilities at 30 June 2019 were $1,800,743 (2018: $274,140) with the increase mainly due to acquisitionof oyster leases under a lease arrangement with an option to purchase.
Net assets for the Group at 30 June 2019 were $12,304,984 (2018: $11,118,639) with the increase due to net profit for the period, and issues of shares on vesting of performance rights during the period.
The Group has a net current asset position at 30 June 2019 of $990,039. The Group’s projections show that the group will generate sufficient cash to settle debts as they fall due.
Full details associated with the financial position of the Company can be found in the Consolidated Financial Statements Section of this document. F
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 8
Strategic and Future Objectives
The Company continues to build a strong and stable business based in South Australia’s Eyre Peninsula; the following objectives are key to the overall success in implementing Angel’s business plan:
a. Delivering the value from increased scale following expansion of the businessb. Implementation of oyster husbandry and farming techniques that optimise the oyster growth cycle and lower
the mortality levels throughout the stock’s lifecyclec. Development and maintenance of key domestic and export sale marketsd. Sustainable growth, through increasing productivity and acquisition of additional leasese. The attraction and maintenance of a vibrant, diverse and engaged workforcef. Continuation of the introduction of industry-leading innovation and efficiencies, leveraging off the Company’s
know-how, scale and financial resourcesg. Capital management and cash flow
The Company will continue to explore further opportunities that meet Angel’s long-term growth and development goals, with the ultimate objective to leverage the Company’s competences to maximise shareholders value through sustainable earnings growth.
Further information about likely developments in the operations of the Company and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group.
Material Business Risks
The Group assesses and manages various business risks with the potential to have a material impact on the Group’s operating and financial performance and its ability to successfully deliver corporate objectives. There are specific risks which relate directly to the Company and the industry in which it operates. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. Set out below are the business risks that the Group has identified as having the potential to have a material impact on the Group.
The matters listed below are not listed in order of importance and are not intended to be an exhaustive list of all the risks and uncertainties affecting the business.
Company specific Risks Competition risk The industry in which the Company is involved is subject to domestic and global competition. Although the Company will undertake reasonable due diligence in its business decisions and operations, the Company has no influence or control over the activities or actions of its competitors, whose activities or actions may, positively or negatively, affect the operating and financial performance of the Company’s business. An increase in the supply of oysters from either domestic or international competitors, or increased competition from alternative fish species and food sources could have an adverse effect of the Company’s operations and business. The Group believes its produce is differentiated through its ‘Organic’ and ‘Sustainable’ certifications and is continuing to develop export markets to diversify its customer base.
Disease risk There is a risk that the Company suffers a disease outbreak that impacts on the health and wellbeing of its oyster stocks. This includes a disease such as Pacific Oyster Mortality Syndrome (POMS) which affects mainly juvenile Pacific Oysters. To date, POMS has not occurred in South Australian oyster growing areas but was identified in a population of feral oysters in the Port River near Adelaide during late summer of 2018. The South Australian Government and the Company have measures in place to mitigate the risk of any such disease. POMS, among other diseases, and natural events may impact the health and wellbeing of the oyster stock.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 9
Title and Renewal Risk The water leases and licences held by the Company are issued through the South Australian state government body called Primary Industries and Regions South Australia (PIRSA). The licence and lease holder must abide by a number of PIRSA regulations and guidelines that are monitored and enforced through mandatory periodic PIRSA officer inspections; Angel is subject to these inspections.
The Group’s oyster leases are classified as ‘production leases’ by the Department of Primary Industries and Regions SA (PIRSA) and are granted for a maximum term of 20 years. Upon the expiry of any given term, they are renewable for successive terms and the Group considers that the risk of any of its oyster leases not being renewed at the end of their current terms to be immaterial.
Environmental The Company’s operations are subject to Government environmental legislation. There is no assurance that the Company’s operations will not be affected by an environmental incident or subject to environmental liabilities. The introduction of new environmental legislation and regulations may result in additional cost to the Company arising from additional compliance and further capital expenditure which may have a material adverse impact on the financial position and performance of the Company. The impact of climate change and/or global warming on the Company’s operations is currently unknown.
Liquidity and capital management Angel’s continued ability to operate its business and execute its business plan over time will depend on its ability to generate free cash flow, to raise funds for operations and growth activities, and to service, repay or refinance debts as they fall due. The Company’s operations are subject to a number of operational and environment risks (refer above) which may ultimately have an impact on the Group’s cash flows and liquidity.
While the Group’s cash flow forecast show that the Group will generate sufficient cash and there are a number of funding options available to the Group, there can be no guarantee that the Group will be able to raise additional funding, should it be required, on acceptable terms or at all.
General risks Economic Risk Changes in both Australian and world economic conditions may adversely affect the financial performance of the Company. Factors such as inflation, currency fluctuations, interest rates, industrial disruption and economic growth may impact on future operations and earnings. If any risks above occur, it may have a significant adverse impact on the Company, its operations and its ability to meet forecast targets.
Legislative Change The introduction of new legislation or amendments to existing legislation by Governments, developments in existing common law, respective interpretation of the legal requirements in any of the legal jurisdictions which govern the Company’s operations or contractual obligations and changes in Government policy could all impact adversely on the assets, operations and the overall financial performance of the Company and its securities.
Climate Change Climate plays an important role in Angel’s operations, with water temperatures and availability of food (algae) in the water having a fundamental impact on the lifecycle of oysters; sizes, growth rates and the ultimate quality of the product. Angel recognises climate change is likely to present a range of challenges to the aquaculture industry. Without proactive adaptation, oyster farming may become more vulnerable to disease and/or changes in environmental conditions.
The company employs sustainable farming practices in its operations and considers the long-term risks, issues and opportunities that can potentially be presented by climate change and responds accordingly. Some studies have linked ocean acidification and temperature rises to climate change. As yet any impact of these factors has not been revealed in any material fashion. However, these factors could impact the long-term future size and quality of product and/or the likelihood of disease or algae events.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 10
Risk Management
Management and the Audit & Risk Management Committee have progressed the development of a Risk Management Framework, to be implemented in the 2019/20 Financial year following the endorsement of the Board of Directors within which:
• an over-arching risk management policy, which sets out its commitment to and the expected behaviours required of its employees and contractors. This is supported by a number of other more specific business policies that set out other key requirements of employees and contractors;
• a risk management process and risk assessment criteria that defines the key steps required to identify, analyse, treat, evaluate controls and monitor and report on the risks listed above and other risks on an ongoing basis;
• accountabilities and responsibilities for overseeing, managing and monitoring these risks and other identified risks are clearly defined;
• key priorities for management of risks are identified on a regular and ongoing basis; and • material or potentially material incidents that arise are reviewed and appropriate action taken.
The management team, and the Board, through the Audit and Risk Committee, reviews the Company’s risks and the effectiveness of the Company’s management of those risks. The Board, with Executive Management’s input, consider the nature and extent of the risks the organisation is prepared to take to meet the Company’s objectives.
Other key management mechanisms for the Company include: • Health, safety and environmental management systems across the organisation; and • Appropriate insurance arrangements to provide efficient and effective levels of risk transfer. Sustainability
The Company believes that if we look after our ‘Seafood Heaven’ it will look after us. Angel is privileged to enjoy farming in a way that respects the waters and environment we farm in. Unfortunately, the majority of oyster farmers around the world still use water-based infrastructure that have been chemically treated (e.g. posts), which is harmful to the eco system and therefore non-organic. The Company aims to operate ‘at-one’ with nature and actively champions ecologically sound farming practices. Sustainability is the key driver and the vision to maintain or increase production levels. The Company is always mindful of, and endeavors to preserve, the very ecosystems that deliver such a premium product for the Company’s customers to enjoy. Angel is privileged to be able to farm in a way that respects the waters and environment in which it operates. The Board believes that the Company’s key differentiators include: Best Practice The Company holds food safety accreditation for the growing, harvest, grading, storage and transportation of oysters from the South Australian (SA) Government (The business that Angel acquired gained Certificates of Accreditation dated 24 February 2011 Accreditation Number 20/176 – Primary Produce (Food Safety Schemes) Act 2004). In addition, the SA Government administers a Shellfish Quality Assurance Program (SASQAP), which is a joint initiative between PIRSA and the shellfish industries of South Australia. SASQAP monitors the water quality in shellfish harvesting areas where the Company’s oysters are grown. In June 2018, following commissioning of the Company’s newly purchased facility in Port Lincoln, certification was granted by the Australian Department of Agriculture, Fisheries and Forestry for an approved arrangement under the Export Control Act 1982, as Export Registered Establishment No 6280. This accredits the good hygienic practice, HACCP, product integrity and importing country requirements required for export. In addition to statutory legislative and regulatory requirements, the Company complies with the SA Environment Protection Authority (EPA) Code of practice for the environmental management of the SA oyster farming industry.
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Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors’ Report
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 11
Certified Organic The business that Angel acquired achieved ‘Certified Organic’ status in 2012, the first oyster grower in Australia to achieve this accreditation. This is accredited by the National Association for Sustainable Agriculture, Australia (NASAA), Certificate No 5411 and was renewed by the Company in FY19, extending the certification to March 2020. Ongoing water monitoring, sea grass management and environmentally friendly infrastructure are just a few elements required to achieve and maintain organic status. The auditing process for obtaining and maintaining certified status is rigorous, and the Company believes this certification is something that its customers, especially in Asia, look for when deciding which farmer to partner with, and reinforces the market focus on seeking a quality, consistent product from a clean, green business.
Sustainability Certification In 2014, the business that Angel acquired was awarded the highly respected “Friends of the Sea” certification, one of only three oyster companies in the world (the others are in Scotland and Croatia) to achieve this certification. This global program strives to make sustainability a reality in the fishing and aquaculture sectors. Reducing ecosystem impact, energy efficiency and social accountability underpin this program. These certifications are subject to regular audits, the most recent of which was conducted in early 2019 and saw the Company achieve renewal of this certification.
The Company uses an adjustable long line system to farm oysters, which is one of the requirements for sustainable certification. This method allows the lines and baskets to be adjusted up and down the holding posts depending on the season, tides, weather, age of the oysters and the condition of the oysters to ensure the oysters are always sitting in the most nutrient-rich section of the water column.
The Company will apply its sustainable and organic farming techniques to newly acquired leases over a staged implementation process, allowing these also to reach the Company’s broader certification standards. These standards will continue to be assessed periodically to ensure certification standards are continually met.
Traceability Organic oysters are 100% traced from spat throughout their life cycle on the Company’s organic farms through to their final customer destinations. The Company can account for each batch of oysters from spat to plate.
It is also important to note that the majority of oyster farmers throughout the world now grow genetically modified oysters, which precludes these farmers from obtaining the organic and sustainable certifications achieved by Angel. This alone gives the Company a significant point of difference and provides its customers with the satisfaction and peace-of-mind knowing the Company’s products are free from being genetically modified or biologically enhanced in any way.
The Company’s environmental passion is also translated into practical innovations. Simple solutions like changing infrastructure from traditional methods (fixed rates) to the world’s best practice (adjustable longline system) have significantly optimised nutrient water flow throughout the Company’s farms. The Company’s impact on the sea bed has been dramatically reduced compared to previously used traditional methods, allowing the sea grasses to regrow and rejuvenate in its natural sense. Efficiencies in growing techniques also result in a stronger, healthier oyster which translates to a longer shelf-life after harvest.
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Environmental regulation
The Company operates a number of licences and leases issued through Primary Industries and Regions South Australia (PIRSA). The licence and lease holder must comply with PIRSA regulations and guidelines. The Company must comply with a number of relevant legislative instruments including the Environmental Protection Act 1993 (SA), Aquaculture Act 2001 (SA), Aquaculture Regulations 2016 (SA), Environmental Protection (Water Quality) Policy 2015, Livestock Act 1997 (SA) and Livestock Notice 2014.
The Company also complies with the South Australian Environment Protection Authority (EPA) Code of practice for the environmental management of the South Australian oyster farming industry. The South Australian Shellfish Quality Assurance Program (SASQAP), which is a joint initiative between PIRSA and the shellfish industries of South Australia, monitors the water quality in shellfish harvesting areas where the Company’s oysters are grown.
No breaches of environmental regulation occurred during the financial year and to the date of this report.
Changes in the state of affairs
The Company acquired oyster leases to extend its operations in Cowell and Coffin Bay during the period, resulting in the core of the Company’s multi-bay operations being in Cowell and Coffin Bay. Leases in Haslam are now being used to warehouse excess stock. The Company announced subsequent to 30 June 2019 that it would sell the Smoky Bay assets.
There were no other significant changes in the state of affairs of the Company, other than as referred to in this Report.
Subsequent events
The following events occurred subsequent to the reporting date have not been accounted for in the financial statements:
Acquisition of additional water in Coffin Bay and Smoky Bay assets disposal On 25 July 2019, the Group entered into an agreement with Mr. Gregory Lawrence to acquire 1.5Ha of quality water in Coffin Bay for $600,000. The additional water will be used to increase finishing capacity to expand existing grow out areas. A deposit of $120,000 was paid in July on signing the agreement with the balance payable in two tranches; $180,000 payable on 18 December 2019 and $300,000 on 1 July 2020, with outstanding balances accruing interest at 6% per annum.
On the same day, the Group announced it had entered into agreements to sell its assets in Smoky Bay, consisting of 1.3Ha of water leases and on-land infrastructure and equipment, for a total of $450,000. The disposed assets had a carrying book value of $307,239.
Hire Purchase agreement On 22 July 2019, the Group finalised settlement for its asset finance facility under a hire purchase agreement with the NAB for its newest and recently commissioned big vessel Angel VI and received $350,000. The Hire Purchase facility will be repaid in 60 equal monthly instalments of $6,480 commencing in August 2019.
Company Dividends
No dividends were paid or declared during the period. For
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Corporate governance
The Board oversees the Company’s business and is responsible for the overall corporate governance of the Company. It monitors the operational, financial position and performance of the Company and oversees its business strategy, including approving the strategy and performance objectives of the Company.
The Board is committed to maximising performance and generating value and financial returns for Shareholders. To further these objectives, the Board has created a framework for managing the Company, including the adoption of relevant internal controls, risk management processes and corporate governance policies and practices, which the Board believes are appropriate for the business and which are designed to promote the responsible management and conduct of the Company. To the extent relevant and practical, the Company has adopted a corporate governance framework that is consistent with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (3rd Edition).
The Company’s Corporate Governance Plan, including key policies, is available at www.angelseafood.com.au.
Directors’ meetings
During the financial year, 15 meetings of Directors, including Committees of Directors, were held. Attendances by each Director during the year were as follows:
Directors Directors’ Meetings Audit and Risk Committee
Eligible to attend
Meetings attended
Eligible to attend
Meetings attended
Tim Goldsmith 15 15 5 5
Michael Porter 15 15 5 5
Ashley Roff 15 15 5 5
Isaac Halman 15 15 - -
Directors’ shareholdings
The following table sets out each Director’s relevant interest in shares, debentures, and rights or options in shares or debentures of the Company or a related body corporate as at the date of this report.
Name Fully paid ordinary shares Share Options Performance
Rights Performance
Shares
Tim Goldsmith 1,940,000 1,500,000 - -
Michael Porter 6,050,000 2,750,000 - -
Ashley Roff 50,000 - - -
Isaac Halman 24,770,210 1,500,000 - 1,000,000
Further details of Directors’ security holdings are provided in the Remuneration Report.
Directors’ and Senior Executives’ Remuneration
Details of the Company’s remuneration polices and the nature and amount of the remuneration of the Directors and senior management (including shares, options and rights granted during the financial year) are set out in the Remuneration Report and in Notes 14 and 15 to the financial statements.
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Remuneration Report (Audited) The Directors of the Company present this Remuneration Report for the Group for the year ended 30 June 2019. The information provided in this Report has been audited as required by section 308(3C) of the Corporations Act 2001 (Cth) (Corporations Act) and forms part of the Directors’ Report.
The Remuneration Report outlines the Company’s key remuneration activities during the financial year ended 30 June 2019 and remuneration information pertaining to the Company’s Directors and senior management personnel who are the key management personnel (KMP) of the Group for the purpose of the Corporations Act and Accounting Standards. These are the personnel who have authority and responsibility for planning, directing and controlling the activities of the Company.
The Directors and KMP of the Group during the year were:
Period of Responsibility in FY19 Position
Non-Executives
Tim Goldsmith Full year Independent Non-executive Chairman
Ashley Roff Full year Independent Non-executive Director
Michael Porter Full year Independent Non-executive Director
Executives
Isaac Halman Full year Chief Executive Officer (CEO); Executive Director and Company Founder
Simba Matute From 25 February 2019 Chief Financial Officer (CFO)
Remuneration Approach
Remuneration comprises elements of fixed remuneration (salary), short-term and long-term incentive plan components. These are set with reference to the Company’s performance and the market. Fixed remuneration, which reflects the individual’s role and responsibility as well as their experience and skills, includes base pay and statutory superannuation. Remuneration at risk is provided through short-term and long-term incentive plan components, linked to performance measured against operational and financial targets set by the Company. These are designed to achieve operational and strategic targets for the sustainable growth of the Company and long-term shareholder value.
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Remuneration and Nomination Responsibilities
Composition
Consistent with the Board’s Charter, the Board has taken the decision that at this early stage of the Company’s growth a separate Remuneration and Nomination Committee is not warranted. Accordingly, the Board as a whole carries out the functions of the Remuneration and Nomination Committee, as described in the Committee Charter. Where appropriate, this is undertaken by Non-executive Directors only, without the presence or participation of the Executive Director.
Functions
The Board reviews any matters of significance affecting the remuneration of the Board and employees of the Company.
The primary remuneration purpose of the Board is to fulfil its responsibilities to shareholders, including by:
a. Ensuring that the approach to executive remuneration demonstrates a clear relationship between key executive performance and remuneration;
b. Fairly and responsibly rewarding executives, having regard to the performance of the Company, theperformance of the executive and the prevailing remuneration expectations in the market;
c. Reviewing the Company’s remuneration, recruitment, retention and termination policies and procedures forsenior management;
d. Reviewing and approving any equity-based plans and other incentive schemes;e. Clearly distinguishing the structure of Non-executive Director (NED) remuneration from that of executive
directors and senior executives, and recommending NED remuneration to the Board;f. Arrange the performance evaluation of the Board, its Committees, individual Directors and senior executives on
an annual basis; andg. Oversee the annual remuneration and performance evaluation of the senior executive team.
The Board considered performance and remuneration of the Non-executive Directors in detail in the latter part of 2017 as part of the due diligence process of preparation of the Prospectus leading to initial ASX listing of the Company on 21 February 2018 and ongoing reviews were undertaken during the year ended 30 June 2019. A performance review of the CEO for FY19 has been completed. Refer ‘Key Terms of Employment Contracts’ below for further details. The Board is currently reviewing NED remuneration for the financial year ending 30 June 2020 (FY20).
Further information about remuneration structures and the relationship between remuneration policy and company performance is set out below.
The Board Charter and the Remuneration and Nomination Committee Charter, which outlines the terms of reference under which the Committee operates, are available in the Corporate Governance Plan at www.angelseafood.com.au.
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Remuneration Policy
The Company’s remuneration framework for Directors and senior executives has been designed to remunerate fairly and responsibly, balancing the need to attract and retain key personnel with a prudent approach to management of costs. Other employees are remunerated in accordance with the provisions of the relevant Fairwork Australia Award. The majority of staff fall under the Aquaculture Attendants’ Award.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows.
The Board aims to remunerate each Non-executive Director at market rates for comparable companies for their time, commitment and responsibilities. The Board determines the annual level of fees payable to Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability and subject to the maximum aggregate amount per annum as approved by shareholders. Fees for NEDs are not linked to the performance of the Group. The Board approves a letter of appointment setting out the key terms and conditions of appointment for each Non-executive Director and Executive Director. Non-executive Directors receive statutory superannuation guarantee payments and do not receive any other retirement benefits. Details of termination arrangements for the Executive Director/CEO are outlined in the section ‘Key Terms of Employment Contracts’.
Short-Term and Long-Term Incentive (STI/LTI) Plans
Following are details of the key terms and conditions of the Performance Shares, Performance Rights and Options comprising the Company’s STI and LTI, as well as the key terms and conditions of the Company’s Performance Rights and Options Plan.
Performance Shares
Terms and conditions of the Performance Shares issued to the Company founder and CEO, Isaac Halman:
a. Performance Shares: Each Performance Share is a share in the capital of the Company.b. General meetings: Each Performance Share confers on the holder (Holder) the right to receive notices of
general meetings and financial reports and accounts of the Company that are circulated to Shareholders.Holders have the right to attend general meetings of Shareholders.
c. No voting rights: A Performance Share does not entitle the Holder to vote on any resolutions proposed by theCompany except as otherwise required by law.
d. No dividend rights: A Performance Share does not entitle the Holder to any dividends.e. No rights to return of capital: A Performance Share does not entitle the Holder to a return of capital, whether
in a winding up, upon a reduction of capital or otherwise.f. Rights on winding up: A Performance Share does not entitle the Holder to participate in the surplus profits or
assets of the Company upon winding up.g. Not transferable: A Performance Share is not transferable.h. Reorganisation of capital: If at any time the issued capital of the Company is reconstructed, all rights of a Holder
will be changed to the extent necessary to comply with the applicable ASX Listing Rules at the time ofreorganisation.
i. Application to ASX: The Performance Shares will not be quoted on ASX. However, if the Company is listed onASX at the time of conversion of the Performance Shares into Shares, the Company must within seven (7) days apply for the official quotation of the Shares arising from the conversion on ASX.
j. Participation in entitlements and bonus issues: A Performance Share does not entitle a Holder (in their capacity as a holder of a Performance Share) to participate in new issues of capital offered to holders of Shares such asbonus issues and entitlement issues.
k. No other rights: A Performance Share gives the Holders no rights other than those expressly provided by theseterms and those provided at law where such rights at law cannot be excluded by these terms.
l. Conversion of the Performance Shares - Conversion on achievement of milestone: Performance Shares willconvert into Shares as follows:
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(i) 500,000 Performance Shares will convert into Shares upon completion of each, and all, of thefollowing on or before 30 September 2018 (Milestone 1). (Milestone 1 was achieved, and 500,000Performance Shares were converted to Shares on 20 September 2018):
A. the acquisition by the Company of the land comprised in Certificate of Title Volume 5563Folio 759 being 35 Haslam Highway, Haslam, SA 5680, South Australian production leasenumbers LA00013, LA00014, LA00172, LA00173, LA00003, AL00372 and AL00106 forIntertidal Oysters and all associated infrastructure (Haslam Assets);
B. the acquisition by the Company of:1. South Australian aquaculture licence number FM00036 and aquaculture lease
number AL00069 for marine molluscs (Intertidal);2. associated plant and equipment; and
C. the land comprised in Certificates of Title Volume 5334 Folio 372 and Volume 5510 Folio54 being allotments 25 DP 45074 and 33 DP 49014 Oyster Drive, Cowell, SA 5602(together, the Cowell Assets);
(ii) 1,000,000 Performance Shares will convert into Shares upon each, and all of the following occurringin the same financial year, by 30 June 2022 (Milestone 2):
A. the Company achieving, in relation to its business and assets at the date it is admitted tothe Official List of ASX and the Haslam Assets and Cowell Assets, annual sales revenue, not including fair value adjustment, of at least $8,000,000, as shown in the Company’s audited financial statements; and
B. the Company being cash flow positive for the financial year; andC. the Company achieving a net profit before tax of at least 2.66 cents earnings per Share
assessed against net profit before tax.m. Conversion on change of control: Subject to paragraph (n) and notwithstanding the relevant milestone has not
been satisfied, upon the occurrence of either:(i) a takeover bid under Chapter 6 of the Corporations Act having been made in respect of the Company
having received acceptances for more than 50% of the Company’s Shares on issue and being declared unconditional by the bidder; or
(ii) a Court granting orders approving a compromise or arrangement for the purposes of or in connectionwith a scheme of arrangement for the reconstruction of the Company or its amalgamation with anyother company or companies,
the Performance Shares shall automatically convert into Shares, provided that if the number of Shares that would be issued upon such conversion is greater than 10% of the Company’s Shares on issue as at the date of conversion, then that number of Performance Shares that is equal to 10% of the Company’s Shares on issue as at the date of conversion under this paragraph will automatically convert into an equivalent number of Company Shares. The conversion will be completed on a pro rata basis across each class of Performance Shares then on issue as well as on a pro rata basis for each Holder. Performance Shares that are not converted into Shares under this paragraph will continue to be held by the Holders on the same terms and conditions.
n. Deferral of conversion if resulting in a prohibited acquisition of Shares: If the conversion of a PerformanceShare would result in any person being in contravention of section 606(1) of the Corporations Act 2001 (Cth)(General Prohibition) then the conversion of that Performance Share shall be deferred until such later time ortimes that the conversion would not result in a contravention of the General Prohibition. In assessing whether a conversion of a Performance Share would result in a contravention of the General Prohibition:
(i) Holders may give written notification to the Company if they consider that the conversion of aPerformance Share may result in the contravention of the General Prohibition. The absence of suchwritten notification from the Holder will entitle the Company to assume the conversion of aPerformance Share will not result in any person being in contravention of the General Prohibition.
(ii) The Company may (but is not obliged to) by written notice to a Holder request a Holder to provide the written notice referred to in paragraph (n)(i) within seven days if the Company considers that the
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conversion of a Performance Share may result in a contravention of the General Prohibition. The absence of such written notification from the Holder will entitle the Company to assume the conversion of a Performance Share will not result in any person being in contravention of the General Prohibition.
o. Redemption if Milestone not achieved: If the relevant Milestone is not achieved by the required date, then thetotal number of Performance Shares on issue to each Holder will convert into one (1) Share.
p. Conversion procedure: The Company will issue the Holder with a new holding statement for any Share issuedupon conversion of a Performance Share within 10 Business Days following the conversion.
q. Ranking upon conversion: The Share into which a Performance Share may convert will rank pari passu in allrespects with existing Shares.
Performance Rights
Terms and conditions attaching to the Performance Rights issued to Angel Oysters Pty Ltd as trustee for the Halman Family Trust as part consideration for the Company’s acquisition of the Smoky Bay Business are as follows. The Milestone at (a) below was met as at 31 December 2018 and the Performance Rights vested in full and were converted to ordinary shares on 27 February 2019.
a. Milestone: The Performance Rights shall vest on achievement of the following milestone: the Companyachieving sales revenue of at least $3,000,000 for any rolling 12-month period on or before 30 June 2021 inrelation to its business and assets (as at the date it is admitted to the Official List of ASX) and the Haslam Assets and Cowell Assets, as shown in the Company’s audited financial statements or reviewed half yearly accounts(Milestone). The Board will consider whether the Milestone may have been met based on the Company’smonthly management accounts. If the Milestone may have been achieved, the Board will direct its auditors toconduct audit tests on the Group’s reported revenue in the 12-months prior to suspected achievement of theMilestone. The auditor will reconcile the balance of the audited accounts to provide confirmation the Milestone has been achieved.
b. Conversion: Subject to paragraph (h), upon the Performance Rights vesting, the 4,000,000 Performance Rights issued will, at the election of the holder, convert into that number of fully paid ordinary shares in the Company(Shares) which is equal to $800,000 divided by the volume weighted average price of the Shares in the 30 days prior to the date of satisfaction of the Milestone (VWAP), provided that the VWAP is not less than $0.10 or inthe event the VWAP is less than $0.10, will convert into 8,000,000 Shares.
c. Vesting: The Performance Rights shall vest on the date that the Milestone has been satisfied.d. Lapse of a Performance Right: If the Milestone attaching to the Performance Rights has not been satisfied by
31 December 2021, the Performance Rights will automatically lapse.e. Notification to holder: The Company shall give written notice to the holder promptly following satisfaction of
the Milestone or lapse of a Performance Right where the Milestone is not satisfied.f. Consideration: No consideration will be payable by the holder upon the vesting of the Performance Rights.g. Conversion on change of control: Subject to paragraph (h) and notwithstanding the Milestone has not been
satisfied, upon the occurrence of either:(i) a takeover bid under Chapter 6 of the Corporations Act 2001 (Cth) having been made in respect of the
Company having received acceptances for more than 50% of the(ii) Company’s Shares on issue and being declared unconditional by the bidder; or(iii) a Court granting orders approving a compromise or arrangement for the purposes of or in connection
with a scheme of arrangement for the reconstruction of the Company or its amalgamation with anyother company or companies,
the Performance Rights will automatically convert into Shares in accordance with paragraph (b). If the number of Shares that would be issued upon such conversion is greater than 10% of the Company’s Shares on issue as at the date of conversion, then only the number of performance Rights equal to 10% of the Shares on issue at the date of conversion will automatically convert into Shares. Performance Rights that are not converted into Shares under this paragraph will continue to be held by the holder on the same terms and conditions.
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h. Deferral of conversion if resulting in a prohibited acquisition of Shares: If the conversion of Performance Rightsinto Shares would result in any person being in contravention of section 606(1) of the Corporations Act 2001(Cth) (General Prohibition) then the conversion of that Performance Right shall be deferred until such latertime or times that the conversion would not result in a contravention of the General Prohibition. In assessingwhether a conversion of a Performance Right would result in a contravention of the General Prohibition:
(i) holders may give written notification to the Company if they consider that the conversion of aPerformance Right may result in the contravention of the General Prohibition. The absence of suchwritten notification from the holder will entitle the Company to assume the conversion of aPerformance Right will not result in any person being in contravention of the General Prohibition; or
(ii) the Company may (but is not obliged to) by written notice to a holder request a holder to provide thewritten notice referred to in paragraph (h)(i) within seven days if the Company considers that theconversion of a Performance Right may result in contravention of the General Prohibition. Theabsence of such written notification from the holder will entitle the Company to assume theconversion of a Performance Right will not result in any person being in contravention of the GeneralProhibition.
i. Share ranking: All Shares issued upon the vesting of Performance Rights will upon issue rank pari passu in allrespects with other Shares.
j. Listing of Shares on ASX: the Company will not apply for quotation of the Performance Rights on ASX. TheCompany will apply for quotation of all Shares issued pursuant to the vesting of Performance Rights on ASXwithin the period required by ASX.
k. Transfer of Performance Rights: A Performance Right is not transferable.l. Participation in new issues: There are no participation rights or entitlements inherent in the Performance Rights
and holders will not be entitled to participate in new issues of capital offered to Shareholders during thecurrency of the Performance Rights.
m. Adjustment for bonus issue: If securities are issued pro-rata to the Shareholders generally by way of bonusissue (other than an issue in lieu of dividends or by way of dividend reinvestment), the number of PerformanceRights to which each holder is entitled, will be increased by that number of Shares which the holder wouldhave been entitled to if the Performance Rights held by the holder were vested immediately prior to the recorddate of the bonus issue, and in any event in a manner consistent with the Corporations Act and the ASX ListingRules at the time of the bonus issue.
n. Adjustment for reconstruction: If, at any time, the issued capital of the Company is reorganised (includingconsolidation, subdivision, reduction or return), all rights of a holder of a Performance Right are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reorganisation.
o. Dividend and Voting Rights: A Performance Right does not confer upon the holder an entitlement to vote onany resolutions proposed by the Company or a right to receive dividends.
p. No rights on winding up or reduction of capital: A Performance Right does not entitle the holder to any returnof capital or to participate in the surplus profits or assets of the Company upon winding up of the Company, areduction of capital or otherwise.
q. No other rights: A Performance Right gives the holders no rights other than those expressly provided by theseterms and those provided at law where such rights at law cannot be excluded by these terms.
Options
OP2 Class Options issued to Directors at IPO
Terms and conditions of options issued to Mr Goldsmith and Mr Porter at IPO, as approved by shareholders at the 2017 Annual General Meeting on 24 October 2017, are as follows.
a. Entitlement: Each Option entitles the holder to subscribe for one Share upon exercise of the Option.b. Exercise Price: Subject to paragraph (i), the amount payable upon exercise of each Option will be $0.40
(Exercise Price).
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c. Expiry Date: Each Option will expire at 5:00 pm (WST) on the fourth-year anniversary of the date the Companyis admitted to the Official List of ASX (Expiry Date). An Option not exercised before the Expiry Date willautomatically lapse on the Expiry Date.
d. Exercise Period: The Options are exercisable at any time on or prior to the Expiry Date (Exercise Period).e. Notice of Exercise: The Options may be exercised during the Exercise Period by notice in writing to the Company
in the manner specified on the Option certificate (Notice of Exercise) and payment of the Exercise Price foreach Option being exercised in Australian currency by electronic funds transfer or other means of paymentacceptable to the Company.
f. Exercise Date: A Notice of Exercise is only effective on and from the later of the date of receipt of the Noticeof Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised incleared funds (Exercise Date).
g. Timing of issue of Shares on exercise: Within 15 Business Days after the Exercise Date, the Company will:(i) issue the number of Shares required under these terms and conditions in respect of the number of
Options specified in the Notice of Exercise and for which cleared funds have been received by theCompany;
(ii) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if theCompany is unable to issue such a notice, lodge with ASIC a Prospectus prepared in accordance withthe Corporations Act and do all such things necessary to satisfy section 708A(11) of the CorporationsAct to ensure that an offer for sale of the Shares does not require disclosure to investors; and
(iii) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issuedpursuant to the exercise of the Options.
If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 business days after becoming aware of such notice being ineffective, lodge with ASIC a Prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.
h. Shares issued on exercise: Shares issued on exercise of the Options rank equally with the then issued shares ofthe Company.
i. Reconstruction of capital: If at any time the issued capital of the Company is reconstructed, all rights of anOption holder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules atthe time of the reconstruction.
j. Participation in new issues: There are no participation rights or entitlements inherent in the Options andholders will not be entitled to participate in new issues of capital offered to Shareholders during the currencyof the Options without exercising the Options.
k. Change in exercise price: An Option does not confer the right to a change in Exercise Price or a change in thenumber of underlying securities over which the Option can be exercised.
l. Transferability: The Options are transferable subject to any restriction or escrow arrangements imposed byASX or under applicable Australian securities laws.
OPE Class Options
The following key terms and conditions apply to the 4,000,000 options issued in April 2017, that became 6,000,000 options as part of the capital reorganisation, prior to ASX listing of the Company.
a. Each Option entitles the holder to subscribe for one Share in the Company upon the payment of $0.0833subsequent to satisfaction of the restriction on exercise set out in (e) below.
b. The Options will lapse at 5:00pm (AEST) on 28 February 2021 (Expiry Date).c. The Options are non-transferable and will not be listed.d. There are no participating rights or entitlements inherent in the Options and holders of the Options will not be
entitled to participate in new issues of capital that may be offered to Shareholders during the currency of theOption.
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e. In the event of any re-organisation (including reconstruction, consolidation, subdivision, reduction or return of capital) of the issued capital of the Company, the Options will be re organised as required by the Directors, butin all other respects the terms of exercise will remain unchanged.
f. The Options shall be exercisable at any time during the period ending on or before the Expiry Date (ExercisePeriod) by the delivery to the registered office of the Company of a notice in writing (Notice) stating theintention of the Option holder to exercise all or a specified number of Options held by the Option holderaccompanied by an Option Certificate or holding statement and a payment to the Company for the subscription moneys for the Shares to be issued on exercise of the Options the subject of the Notice. The Notice and cheque must be received by the Company during the Exercise Period. An exercise of only some Options shall not affectthe rights of the Option holder to the balance of the Options held by him.
g. The Company shall allot the resultant Shares and deliver a statement of shareholdings with a holders’identification number, if the Company is listed, within 5 business days of exercise of the Options.
h. The Shares allotted shall rank, from the date of allotment, equally with the existing Shares of the Company inall respects.
OP3 Class Options
1,200,000 options were issued in the financial year ended 30 June 2019 to the incoming CFO, Mr Simba Matute. These options were issued as a retention incentive and vesting is subject to the CFO remaining employed at 25 February 2020, being 12 months after commencement of his employment. The options are exercisable at $0.28 per option, subject to vesting, and will lapse on 25 February 2022 if not exercised before that date. These options are governed by the terms and conditions of the Company’s Performance Rights and Option Plan, details of which are provided below.
Option and Performance Rights Plan
Options and Performance Rights are issued pursuant to the Company’s Option and Performance Rights Plan, a copy of which is available on the Company’s website at www.angelseafood.com.au. Key terms of the Option and Performance Rights Plan follow:
The key terms of the Performance Rights and Option Plan (Plan) are as follows:
a. Eligibility: Participants in the Plan may be:(i) a Director (whether executive or non-executive) of the Company and any associated body corporate
of the Company (each a Group Company);(ii) a full or part time employee of any Group Company;(iii) a casual employee or contractor of a Group Company to the extent permitted by ASIC Class Order
14/1000 as amended or replaced (Class Order); or(iv) a prospective participant, being a person to whom the offer is made but who can only accept the offer
if an arrangement has been entered into that will result in the person becoming a participant undersubparagraphs (i), (ii), or (iii) above,
who is declared by the Board to be eligible to receive grants of Awards under the Plan (Eligible Participants).
b. Offer: The Board may, from time to time, in its absolute discretion, make a written offer to any EligibleParticipant (including an Eligible Participant who has previously received an offer) to apply for Awards, uponthe terms set out in the Plan and upon such additional terms and conditions as the Board determines (Offer).
c. Plan limit: The Company must have reasonable grounds to believe, when making an offer, that the number ofShares to be received on exercise of Awards offered under an offer, when aggregated with the number ofShares issued or that may be issued as a result of offers made in reliance on the Class Order at any time duringthe previous 3 year period under an employee incentive scheme covered by the Class Order or an ASIC exempt arrangement of a similar kind to an employee incentive scheme, will not exceed 5% of the total number ofShares on issue at the date of the offer.
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d. Issue price: Unless the Awards are quoted on the ASX, Awards issued under the Plan will be issued for no morethan nominal cash consideration.
e. Vesting Conditions: An Award may be made subject to vesting conditions as determined by the Board in itsdiscretion and as specified in the offer for the Awards (Vesting Conditions).
f. Vesting: The Board may in its absolute discretion (except in respect of a Change of Control (as defined in thePerformance Rights and Option Plan) occurring where Vesting Conditions are deemed to be automaticallywaived) by written notice to a Participant (being an Eligible Participant to whom Awards have been grantedunder the Plan or their nominee where the Awards have been granted to the nominee of the Eligible Participant (Relevant Person)), resolve to waive any of the Vesting Conditions applying to Awards due to:
(i) Special Circumstances arising in relation to a Relevant Person in respect of those Performance Rights,being:
A. A Relevant Person ceasing to be an Eligible Participant due to:1. death or total or permanent disability of a Relevant Person; or2. retirement or redundancy of a Relevant Person;
B. a Relevant Person suffering severe financial hardship;C. any other circumstance stated to constitute “special circumstances” in the terms of the
relevant Offer made to and accepted by the Participant; orD. any other circumstances determined by the Board at any time (whether before or after the
Offer) and notified to the Relevant Participant which circumstances may relate to theParticipant, a class of Participant, including the Participant or particular circumstances orclass of circumstances applying to the Participant; or
(ii) a Change of Control occurring (as defined in the Performance Rights and Option Plan); or(iii) the Company passing a resolution for voluntary winding up, or an order is made for the compulsory
winding up of the Company.g. Lapse of an Award: An Award will lapse upon the earlier to occur of:
(i) an unauthorised dealing, or hedging of, the Award occurring;(ii) a Vesting Condition in relation to the Award is not satisfied by its due date, or becomes incapable of
satisfaction, as determined by the Board in its absolute discretion, unless the Board exercises itsdiscretion to waive the Vesting Condition and vest the Award;
(iii) in respect of unvested Awards only, an Eligible Participant ceases to be a Relevant Person, unless theBoard exercises its discretion to vest the Award in the circumstances set out in paragraph (f) or theBoard resolves, in its absolute discretion, to allow the unvested Awards to remain unvested after theRelevant Person ceases to be an Eligible Participant;
(iv) in respect of vested Awards only, a relevant person ceases to be an Eligible Participant and the Award granted in respect of that person is not exercised within a one (1) month period (or such later date asthe Board determines) of the date that person ceases to be an Eligible Participant;
(v) the Board deems that an Award lapses due to fraud, dishonesty or other improper behaviour of theEligible Participant;
(vi) the Company undergoes a change of control or a winding up resolution or order is made, and theBoard does not exercise its discretion to vest the Award;
(vii) the expiry date of the Award.h. Shares: Shares resulting from the exercise of the Awards shall, subject to any Sale Restrictions (refer paragraph
(i)) from the date of issue, rank on equal terms with all other Shares on issue.i. Sale Restrictions: The Board may, in its discretion, determine at any time up until exercise of Awards, that a
restriction period will apply to some or all of the Shares issued to a Participant (or their eligible nominee) onexercise of those Awards up to a maximum of five (5) years from the grant date of the Awards. In addition, theBoard may, in its sole discretion, having regard to the circumstances at the time, waive any such restrictionperiod determined.
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j. No Participation Rights: There are no participating rights or entitlements inherent in the Awards and holderswill not be entitled to participate in new issues of capital offered to Shareholders during the currency of theAwards.
k. Change in exercise price of number of underlying securities: Unless specified in the offer of the Awards andsubject to compliance with the ASX Listing Rules, an Award does not confer the right to a change in exerciseprice or in the number of underlying Shares over which the Award can be exercised.
l. Reorganisation: If, at any time, the issued capital of the Company is reorganised (including consolidation,subdivision, reduction or return), all rights of a holder of an Award are to be changed in a manner consistentwith the Corporations Act and the ASX Listing Rules at the time of the reorganisation.
m. Trust: The Board may, at any time, establish a trust for the sole purpose of acquiring and holding Shares inrespect of which a Participant may exercise, or has exercised, vested Awards, including for the purpose ofenforcing the disposal restrictions and appoint a trustee to act as trustee of the trust. The trustee will hold theShares as trustee for and on behalf of a Participant as beneficial owner upon the terms of the trust. The Boardmay at any time amend all or any of the provisions of the Plan to affect the establishment of such a trust andthe appointment of such a trustee.
Key Terms of Employment Contracts
Key terms of employment contracts were included in the Company’s Prospectus. Below is a summary of these key terms of employment contracts:
Non-executive Directors
The Company has entered into letters of appointment with each Non-executive Director, which set out the terms and conditions of their appointment. Non-executive Directors’ receive fixed annual remuneration and statutory superannuation payments. No additional fees are paid for Directors’ service on Board Committees. Further remuneration details are provided in the Board Remuneration section of this report.
In addition, as approved by shareholders at the 2017 Annual General Meeting (AGM), 1,500,000 OP2 Class options were issued to Mr Goldsmith and 500,000 OP2 Class options were issued to Mr Porter at the time of the Company’s admission to the Official List of ASX, in accordance with the Option and Performance Rights Plan and key terms and conditions described above.
Directors are subject to the provisions of the Constitution relating to retirement by rotation and re-election of directors. A Director may terminate their directorship at any time by advising the Board in writing. The Non-executive Director Agreements are otherwise made on standard commercial terms and in accordance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (3rd Ed).
Chief Executive Officer / Company Founder
The Company’s wholly owned subsidiary, Angel Oysters Australia Pty Ltd (AOA) entered into an executive employment agreement with Isaac Halman dated 1 May 2017 (Executive Employment Agreement) pursuant to which Mr Halman is appointed as the Managing Director of AOA.
The Company also entered into a letter agreement with Mr Halman pursuant to which he was appointed as an Executive Operations Director of the Company. In August 2018, the Board of the Company approved a change to Mr Halman’s title, to Chief Executive Officer. He retains his appointment as an executive Director of the Company.
The material terms and conditions of the Executive Employment Agreement are summarised below:
a. Term: Mr Halman commenced his employment on 1 May 2017 and the Executive Employment Agreementcontinues until terminated in accordance with its terms.
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b. Remuneration: Mr Halman receives a fixed salary and employer superannuation contributions at the statutory rate of 9.5%. For the year ended 30 June 2019 this salary was $180,000; this was increased by the Board to$230,000 effective 1 July 2019, following a performance review.
c. Incentive Programs: Mr Halman may participate in any incentive plan that the Company may introduce fromtime to time. The Company issued Mr Halman 500,000 Shares upon being admitted to the ASX Official List as abonus and 1,500,000 Performance Shares as an incentive. The first tranche of 500,000 Performance Shares,relating to performance indicators to be achieved by 30 September 2018, vested on 20 September 2018. Theremaining 1,000,000 Performance Shares are subject to long-term incentive performance hurdles as describedin the Performance Shares terms and conditions. The performance hurdles also apply to the vesting of theCFO’s performance rights. Mr Halman is also eligible for an annual short-term incentive (STI) cash bonus,subject to satisfaction of key performance indicators (KPIs) set by the Board. The maximum cash bonus payable in respect of performance during the financial year ended 30 June 2019 is 25% of fixed salary. This was assessed by the Board in July 2019 against previously set key performance indicators and approved for 50% payment of the maximum cash bonus, which will be made in the 2019/20 financial year.
d. Termination: The Company may terminate the Executive Employment Agreement for any reason by giving four weeks’ notice. Further, the Company may immediately terminate the employment of Mr Halman in the caseof serious misconduct.
The Executive Employment Agreement contains other standard terms and conditions expected to be included in a contract of this nature.
Chief Financial Officer (CFO)
Mr Simba Matute was appointed CFO on 25 February 2019. The material terms and conditions of the Executive Employment Agreement for the CFO are summarised below:
a. Term: Mr Matute commenced his employment on 25 February 2019 and the Executive Employment Agreement continues until terminated in accordance with its terms.
b. Remuneration: Mr Matute receives a fixed salary of $220,000 and employer superannuation contributions atthe statutory rate of 9.5%.
c. Incentive Programs: Mr Matute may participate in any incentive plan that the Company may introduce fromtime to time. The Company issued Mr Matute 1,200,000 options as a retention incentive; these options vest ifMr Matute remains employed after 12 months. Mr Matute is also eligible for an annual STI cash bonus, subject to satisfaction of KPIs set by the Board. The calculation of the STI will be based on Mr Matute meeting bothindividual and corporate KPIs, with his performance against both sets of KPIs being given equal weight. Themaximum cash bonus STI payable in respect of performance is 25% of fixed salary paid or accrued in respect of the relevant financial year. The Board reviewed performance in August 2019 against previously set keyperformance indicators and approved for 75% payment of the maximum cash bonus (pro-rata for length ofservice), which will be made in the 2019/20 financial year. The Company also issued Mr Matute with 1,000,000 Performance Rights under the LTI plan, subject to the same vesting hurdles as for the CEO’s LTI of tranche 2 ofhis Performance Shares.
d. Termination: The employment agreement may be terminated by either party by giving three months’ notice.The Company may immediately terminate the employment of Mr Matute in the case of serious misconduct.
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Relationship between Remuneration Policy and Group Performance
(i) The Company was incorporated on 27 September 2016 as a proprietary company and was changed to an unlisted public company on 21 April2017. Initial listing on the ASX occurred on 21 February 2018. The share price at start of year is based on the value of shares taken up pursuantto the Prospectus and at initial listing.
See also the sections ‘Remuneration Policy’ and ‘STI/LTI Plans’ above, including the details of performance milestones for STI and LTI. These performance milestones link clearly to the Group’s objectives as outlined in the Prospectus and to Strategic and Future Objectives as discussed in the Directors’ Report above.
2019 2018(i) 2017(i) 2016 2015
$’000 $’000 $’000 $’000 $’000
Revenue 4,272 1,459 1,385 N/A N/A
EBITDA (Statutory) 1,175 (890) (1,118) N/A N/A
EBITDA (Proforma) 1,175 (890) (1,118) N/A N/A
Net Profit/(Loss) after tax attributable to members of the parent entity 305 (1,143) (1,668) N/A N/A
Share price at start of year(i) $0.16 $0.20 N/A N/A N/A
Share price at end of year $0.20 $0.16 N/A N/A N/A
Basic earnings (cents) per share 0.24 (1.18) (4.70) N/A N/A
Diluted earnings (cents) per share 0.22 (1.13) (4.61) N/A N/A
Interim and final dividend N/A N/A N/A N/A N/A
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Details of Key Management Personnel Remuneration
Remuneration for the financial year ended 30 June 2019
FIXED REMUNERATION VARIABLE REMUNERATION
Salaries and fees
Super-annuation Leave(1) Other
Short term incentive
(cash) Shares(2)
Performance shares and
rights(2) Options(2) Total
Total performance
related Fixed
remuneration
$ $ $ $ $ $ $ $ $ $ %
Non-Executive Directors
T Goldsmith 50,000 4,750 - - - - - - 54,750 - 100%
A Roff 40,000 3,800 - - - - - - 43,800 - 100%
M Porter 40,000 3,800 - - - - - - 43,800 - 100%
Sub-total Non-Executive Directors 130,000 12,350 - - - - - - 142,350 - 100%
Executives and other KMP
I Halman(3) 180,000 18,430 19,542 - 36,500(3) - 810,416 - 1,064,888 846,916 20%
S Matute(4) 72,173 6,833 5,532 30,000 14,438 - 17,418 37,134 183,528 68,990 62%
Sub-total Executives 252,173 25,263 25,074 30,000 50,938 - 827,834 37,134 1,248,416 915,906 27%
TOTAL 382,173 37,613 25,074 30,000 50,938 - 827,834 37,134 1,390,766 915,906
1. Represents annual leave and long service leave entitlements, being the net movement in accrued benefits during the period.2. Represents amounts expensed in the Company’s profit and loss during the year for shares, performance shares and rights and share options granted to Directors and Executives. These amounts are recognised in the profit
and loss over the vesting period of each grant in accordance with AASB 2 Share Based Payments 3. I Halman was granted a cash bonus (STI) of $14,000 with respect to performance for the year ended 30 June 2018 (not previously accrued), and a bonus of $22,500 with respect to performance for the year ended 30 June
2019. 4. S Matute commenced his employment as CFO on 25 February 2019. He was granted a sign-on bonus of $30,000 in accordance with his Executive Employment Agreement.
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Remuneration for the financial year ended 30 June 2018
FIXED REMUNERATION VARIABLE REMUNERATION
Salaries and fees
Super-annuation Leave(1) Other
Short term incentive
(cash) Shares(2)
Performance shares and
rights(2) Options(2) Total
Total performance
related Fixed
remuneration
$ $ $ $ $ $ $ $ $ $ %
Non-Executive Directors
T Goldsmith(3) 11,125 1,057 - - - - - 10,800 22,982 - 100%
A Roff(3) 8,900 846 - - - - - - 9,746 - 100%
M Porter(4) 80,600 3,800 - - - 20,000 - 3,600 108,000 - 100%
J Rogalski(5) 30,000 - - - - - - - 30,000 - 100%
B Bosnich(6) 8,333 - - - - - - - 8,333 - 100%
Sub-total Non-Executive Directors 138,958 5,703 - - - 20,000 - 14,400 179,061 - 100%
Executives and other KMP
I Halman(7) 150,769 13,300 582 - - 100,000 152,526 - 417,177 252,526 39%
Sub-total Executives 150,769 13,300 582 - - 100,000 152,526 - 417,177 252,526 39%
TOTAL 289,727 19,003 582 - - 120,000 152,526 14,400 596,238 252,526
1. Represents annual leave and long service leave entitlements, being the net movement in accrued benefits during the period.2. Represents amounts expensed in the Company’s profit and loss during the year for shares, performance shares and rights and share options granted to Directors and Executives. These amounts are recognised in the profit
and loss over the vesting period of each grant in accordance with AASB 2 Share Based Payments 3. Tim Goldsmith and Ashley Roff were appointed on 21 February 2018.4. Michael Porter was appointed as a Non-executive Director on 2 December 2016. From the date of appointment to 1 March 2017 he served as Non-executive Chairman and then fulfilled the role as Executive Chairman from
22 August 2017 to 21 February 2018 before reverting to a Non-Executive Director role on 21 February 2018. He provided consultancy services to the Group in addition to his role as a Director. Refer Note 14(d). 5. James Rogalski resigned from the Board effective 21 February 2018. He is a Director of Interacct Business Consulting Pty Ltd which provides accounting, taxation and advisory services to the Group. Refer Note 14(d).6. Boris Bosnich was appointed on 1 March 2017 and resigned on 11 August 2017. He is a Director of B5 Partners Pty Ltd which provided consultancy services to the Company. Refer Note 14(d). 7. As described in section 15.7 of the Prospectus (available at www.angelseafood.com.au), upon admission to the ASX official List the Company issued Mr Halman 500,000 Shares as a bonus and 1,500,000 Performance Shares
as an incentive. Following a review of 2018 performance, the Board approved a cash bonus of $14,000 and vesting of 500,000 Performance Shares. These were implemented in the first quarter of FY19.
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Key Management Personnel: Share-based Compensation
Performance shares and rights issued
Tranche Grant date Number granted
Fair value per performance
share or right at grant date $
Number vested
during the year
Year in which right
may be vested
Vested %
Fair value of exercised
performance share or rights during the year
Number lapsed
during the year
Year lapsed performance rights were
granted
Amount paid or payable for
exercised performance
rights
Terms and conditions for each grant
Exercise price
$ Expiry date
First exercise
date
Last exercise
date
Performance shares
I Halman IPO 8/2/18 1,500,000 0.20 500,000 2019 33% 100,000 - N/A - - 30/6/21 21/2/19 30/6/21
Performance rights
I Halman IPO 8/2/18 4,000,000 0.20 4,000,000 2019 100% 800,000 - N/A - - 30/6/21 21/2/19 30/6/21
S Matute PR1 7/5/19 1,000,000 0.17 - 2020 0% - - N/A - - 30/6/22 30/6/20 30/6/22
Total 5,500,000
Options issued
Tranche Grant date Number granted
Fair value per option at grant
date $
Number vested
during the year
Year in which
option may be vested
Vested %
Fair value of exercised
options during the year
Number lapsed
during the year
Year lapsed options were
granted
Amount paid or payable for
exercised options
Terms and conditions for each grant
Exercise price
$ Expiry date
First exercise
date
Last exercise
date
I Halman OPE 24/4/17 1,500,000 0.061 - N/A 100% - - N/A N/A 0.0833 28/2/21 24/4/17 21/2/21
T Goldsmith OP2 8/2/18 1,500,000 0.007 - N/A 100% - - N/A N/A 0.40 21/2/22 21/2/18 21/2/22
M Porter OPE 24/4/17 1,500,000 0.061 - N/A 100% - - N/A N/A 0.0833 28/2/21 24/4/17 28/2/21
M Porter OP2 8/2/18 500,000 0.007 - N/A 100% - - N/A N/A 0.40 21/2/22 21/2/18 21/2/22
S Matute OP3 7/5/19 1,200,000 0.083 - 2020 0% - - N/A N/A 0.28 25/2/22 25/2/20 25/2/22
Total 6,200,000
Option tranches (refer ‘Short Term and Long-Term Incentive Plans’ above and Note 29 to the financial statements) are as follows:
OPE Options issued during pre-IPO period. The ‘number granted’ reflects the number on issue following the capital reorganisation by the Company on 31 October 2017 (3 for 2), at which time 1,000,000 converted to 1,500,000. Refer Note 29(a) and table ‘Options held by KMP’ below.
OP2 Options issued to Non-executive Directors at IPO.
OP3 Options issued as retention incentive to CFO.
No options have been exercised during the year. Options in tranches OPE and OP2 are subject to escrow until 21 February 2020 and are not subject to performance hurdles, having vested immediately upon issue.
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Performance rights held by Key Management Personnel
The number of performance rights in the Company held by each KMP:
Balance at
01/07/17 Granted
Perform-ance rights
exercised Expired/
Lapsed Balance at 01/07/18 Granted
Perform-ance rights
exercised Expired/
Lapsed Balance at 30/06/19
Angel Oysters Pty Ltd ATF Halman Family Trust (1) - 4,000,000 - - - - 4,000,000 - -
Simba Matute - - - - - 1,000,000 - - 1,000,000
Total 4,000,000 - - - 1,000,000- 4,000,000 - 1,000,000
1. Angel Oysters Pty Ltd is controlled by Mr Isaac Halman
Performance shares held by Key Management Personnel
The number of performance shares in the Company held by each KMP:
Balance at
01/07/17 Granted
Perform-ance rights converted
Expired/ Lapsed
Balance at 01/07/18 Granted
Perform-ance shares
converted Expired/
Lapsed Balance at 30/06/19
Isaac Halman - 1,500,000 - - 1,500,000 - 500,000 - 1,000,000
Total - 1,500,000 - - 1,500,000 - 500,000 - 1,000,000
The first tranche of 500,000 Performance Shares, relating to performance indicators to be achieved in the period from ASX listing on 21 February 2018 to 30 September 2018, vested on 20 September 2018 and was converted to ordinary shares.
Options held by Key Management Personnel
The number of options in the Company held by each KMP are as follows. Not all options were granted as part of KMP remuneration.
Balance at 01/07/17
Share split 3 for 2 (1) Granted
Options exercised
Expired/ Lapsed
Balance at 01/07/18 Granted
Options exercised
Expired/ Lapsed
Balance at 30/06/19
Tim Goldsmith - 1,500,000 - - 1,500,000 - - - 1,500,000
Michael Porter 1,000,000 500,000 1,250,000 - - 2,750,000 - - - 2,750,000
Isaac Halman 1,000,000 500,000 - - - 1,500,000 - - - 1,500,000
Simba Matute - - - - - - 1,200,000 - - 1,200,000
Total 2,000,000 1,000,000 2,750,000 - - 5,750,000 1,200,000 - - 6,950,000
1. On 31 October 2017 the Company reorganised its capital by way of a 3 for 2 share split.
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Number of shares held by key management personnel
The number of ordinary shares in the Company held by each KMP of the Company during the financial year is as follows:
Balance at 1 July 2018
Options Exercised
Net Change Other
Balance at 30 June 2019
Tim Goldsmith 1,740,000 - 200,000(1) 1,940,000
Ashley Roff 50,000 - - 50,000
Michael Porter 5,253,198 - 796,802(2) 6,050,000
Isaac Halman 18,612,502 - 6,157,708(3) 24,770,210
25,655,700 - 7,154,510 32,810,210
1. Mr Goldsmith acquired shares on the market2. Mr Porter acquired shares on-market3. Mr Halman acquired shares as a result of conversion of vested Performance Rights and Performance Shares
There were no other changes to KMP shareholdings in the period from 30 June 2019 to the date of this report.
Board Remuneration
Policy
The Board’s policy in relation to Board remuneration is outlined in the section ‘Remuneration Policy’ above.
Maximum Aggregate Amount
Total fees paid to all non-executive Director in a year must not exceed $200,000, which was the amount approved by shareholders at the Company’s first Annual General Meeting (AGM) on 24 October 2017.
The Company’s Constitution provides that the Board may, subject to the ASX Listing Rules, authorise the provision of other benefits by the Company to a Director for services as a director or in any other capacity if the Board is satisfied that to do so is fair to the Company. The Board may also authorise special remuneration to any Director who is or has been engaged by the Company to carry out work or perform any services which are not in their capacity as a director of the Company or a related company. A Director may also be reimbursed for reasonable travelling, accommodation and other expenses incurred in the course of performing duties or exercising powers as a Director.
Remuneration
Board remuneration, as detailed in the Prospectus and adopted at the date of listing on the ASX on 21 February 2018 is as follows:
Chairman: $50,000 per annum Non-executive Director $40,000 per annum
Directors do not receive any additional fees for serving on or chairing any Board committee. In addition to the above Directors’ fees, as detailed in the Prospectus, Mr Goldsmith and Mr Porter were allocated 1,500,000 and 500,000 options respectively upon listing of the Company on the ASX in the financial year ended 30 June 2018. Details of these options are included in the Remuneration Report.
Fees are shown exclusive of superannuation. Superannuation contributions are made on behalf of Non-executive Directors in accordance with the requirements of the Company’s statutory superannuation obligations. Non-executive Directors are not entitled to any other retirement benefits.
Other equity-related key management personnel transactions
There have been no transactions involving equity instruments other than those described in the tables above relating to options, rights and shareholdings.
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Loans from Key Management Personnel to the Company
No loans were made from the Company to any KMP and no loans were made from KMP to the Company in 2019 (2018: nil). Refer to Note 14 to the financial statements.
Other Transactions with Key Management Personnel
Details of transactions with related parties including KMPs are provided at Note 14 to the financial statements.
-- End of Remuneration Report --
Options, Performance Rights and Performance Shares
Holders of options, performance shares and performance rights do not have any rights to participate in any issue of shares or other interests of the Company or any other entity.
Options
During the financial year ended 30 June 2019, 1,200,000 options were issued (2018: 6,000,000). No shares were issued on the exercise of options during the financial year ended 30 June 2019 (2018: nil).
At the date of this report, the unissued ordinary shares of the Company under option are as follows:
Grant date Expiry date Exercise price ($) Number of
options
20 Apr 2017(1) 28 Feb 2021 0.0833 6,000,000(2)
8 Feb 2018 28 Feb 2022 0.2000 4,000,000(2)
8 Feb 2018 28 Feb 2022 0.4000 2,000,000(2)
7 May 2019 25 Feb 2022 0.2800 1,200,000
13,200,000
1. 4,000,000 options were originally issued at an exercise price of $0.125; this was converted to 6,000,000 options at an exercise price of $0.0833 as a result of the Company’s capital reorganisation on a 3 for 2 basis on 31 October 2017.
2. Subject to escrow for 24 months following the date of initial ASX listing on 21 February 2018.
Performance shares and rights
During the financial year ended 30 June 2019, 1,000,000 performance rights were issued (2018: 4,000,000 performance rights and 1,500,000 performance shares).
The following fully paid ordinary shares were issued during the year ended 30 June 2019 as a result of conversion of 500,000 performance shares and 4,000,000 vested performance rights.
Grant Date Number of shares issued) (1)
8 February 2018 6,157,708
1. Subject to escrow for 24 months following the date of initial ASX listing on 21 February 2018.
At the date of this report, the unissued performance shares and unissued ordinary shares of the Company under performance rights are as follows.
Classification Grant date Expiry date Consideration payable ($)
Number of options
Performance shares 8 Feb 2018 30 Jun 2022 Nil 1,000,000(1)
Performance rights 7 May 2019 30 Jun 2022 Nil 1,000,000
1. Subject to escrow for 24 months following the date of initial ASX listing on 21 February 2018.
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Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 32
Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors' Report
Each outstanding performance share or performance rights will, upon satisfaction of vesting conditions, convert to one ordinary share of the company.
There have been no options, performance shares or performance rights granted over unissued shares or interests of any controlled entity within the Group since the end of the reporting period.
For details of options, performance shares and performance rights issued to Directors and executives as remuneration, refer to the Remuneration Report.
Proceedings on behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the financial year.
Indemnification and Insurance of Officers or Auditor
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company Secretary, and all Executive Officers of the Company against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.
Audit and Non-Audit Services
The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of audit and non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the non-audit services provided by the auditors during the year did not compromise the external auditor’s independence. All services provided by the external auditor or associates are reviewed and approved by the Audit and Risk Committee and/or the Board to ensure they do not adversely affect the integrity an objectivity of the auditor. The following fees were paid or payable to William Buck and its associates for audit and non-audit services provided during the year ended 30 June 2019:
2019 2018 $ $
Audit services
Auditing/reviewing the financial statements for Company 45,341 28,270
Auditing/reviewing the financial statements for Halman Family Trust - 13,500
Total audit fees 45,341 41,770
Non-audit Services
- preparation of the independent accountant’s report - 34,000
- Agreed Upon Procedures 900 -
Total fees paid to William Buck and associates 46,241 75,770
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Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 33
Angel Seafood Holdings Ltd (ACN 615 035 366) – Directors' Report
Auditor’s independence declaration
The auditor’s independence declaration is included on page 34 of the Annual Report.
This Directors’ report is signed in accordance with a resolution of Directors made pursuant to s298(2) of the Corporations Act 2001.
On behalf of the Directors
Tim Goldsmith Chairman
30 August 2019
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32
Auditor’s Independence Declaration Under Section 307c Of The Corporations Act 2001 To The Directors Of Angel Seafood Holdings Ltd
I declare that, to the best of my knowledge and belief during the year ended 30 June 2019 there have been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
William Buck ABN: 38 280 203 274
M.D. KingPartner
Dated this 30th day of August, 2019 in Adelaide, South Australia.
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Report on the Audit of the Financial Report
Opinion We have audited the financial report of Angel Seafood Holdings Ltd (the Company and its subsidiaries (the Group)), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for
the year ended on that date; and(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER Biological assets existence and valuation Refer also to notes 8(a), 20(c) and 20(q)
How our audit addressed it
The Group’s biological assets consist of oysters, which are measured at fair value less costs to sell.
The process of estimating the fair value is complex involving a number of judgements and estimates regarding various inputs. Due to the nature of the asset, the valuation technique includes a model that uses a number of inputs from internal and external sources.
This area is a key audit matter due to the complex nature involving a number of judgements and estimates.
Our audit procedures included:
‒ Documenting the processes and assessing the internal controls relating to the valuation methodology applied to biological assets;
‒ Attending a physical inspection of oyster leases and grading during the year to observe and document the process and related controls;
‒ Reviewing the inputs used in the valuation model by comparing to actual performance subsequent to reporting date, comparing with historical performance of the Group and comparing to external data such as current oyster prices, where external data is available;
‒ Reviewing the historical accuracy of the Group’s assessment of the fair value of Oysters by comparing to actual outcomes; and
Angel Seafood Holdings Ltd Independent auditor’s report to members
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‒ Assessing the adequacy of the related disclosures within the financial statements.
KEY AUDIT MATTER Carrying value of property, plant and equipment and intangible assets Refer also to notes 8(b) 8(c), 20(c), 20(k), 20(l) and 20(m)
How our audit addressed it
As disclosed in Notes 8(b) and 8(c), at 30 June 2019 the Group's balance sheet includes property, plant and equipment of $7,038,786 and intangible assets of $6,580,356, which make up one cash generating unit (CGU). The oyster leases are indefinite life intangible assets.
The assessment of the recoverable amount of the Group’s property, plant and equipment and intangible assets requires the exercise of significant judgement in respect of factors such as discount rates, cash flow forecasts and economic assumptions such as inflation.
The outcome of this assessment could vary significantly if different assumptions were applied and as a result the evaluation of the carrying value of property, plant and equipment and intangible assets is a key audit matter.
Our audit procedures included:
‒ A detailed evaluation of the Group’s budgeting procedures (upon which the forecasts are based) and testing the principles and integrity of the discounted future cash flow models.
‒ Testing the accuracy of the calculation derived from each forecast model and we assessed key inputs in the calculations such as revenue growth, discount rates and working capital assumptions, by reference to the Board approved forecasts, data external to the Group and our own views.
‒ Engaging our own valuation specialists when considering the appropriateness of the discount rates and the long term growth rates.
We also considered the adequacy of the Group’s disclosures in relation to the impairment testing.
KEY AUDIT MATTER Liquidity and capital management Refer also to note 11(b)
How our audit addressed it
To support its basis of preparation of the financial statements, the Group has prepared a forecast of its cash flows, which includes a number of significant assumptions about sales and production such as mortality rates, finishing capacity and average sales price.
The Group’s operations are subject to a number of operational and environmental risks inherent to primary industries and the nature of biological stock which may ultimately have an impact on the Group’s cash flows and liquidity. As a result, our assessment of liquidity and capital management as it relates to the basis of preparation of the financial statements is considered a key audit matter.
We assessed the main assumptions in the Group’s cash flow forecast for at least 12 months from the date of signing the auditor’s report, by performing the following procedures, amongst others:
‒ Compared actual revenue and cost outcomes for the prior period and the current year to date to Group forecasts.
‒ Ensuring that all committed capital purchases and debt facility reduction requirements are taken into consideration.
We evaluated the Group’s potential opportunities for cash conservation as well as options for raising additional funds.
We also considered the appropriateness of the liquidity risk disclosures included within the financial statements.
Other Information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
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If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 14 to 31 of the directors’ report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Angel Seafood Holdings Ltd, for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001.
Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
William Buck ABN: 38 280 203 274
M.D. KingPartner
Dated this 30th day of August, 2019 in Adelaide, South Australia.
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 38
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
The financial statements are presented in Australian dollars which is the functional currency of the Group.
Angel Seafood Holding is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:
48 Proper Bay Road Port Lincoln SA 5606 Australia
A description of the nature of the consolidated entities operations and its principal activities is included in the directors report on pages 3 to 33, which is not a part of these financial statements.
Financial statements were authorised for issue by the Directors of the company on 30 August 2019. The Directors have the power to amend and reissue the financial statements.
CONTENTS Page Financial statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income 39
Consolidated Statement of Financial Position 40
Consolidated Statement of Changes in Equity 41 Consolidated Statement of Cash Flows 42
Notes to the financial statements How the numbers are calculated
1 Introduction 44
2 Segment information 45
3 Revenue 45 4 Other income 46 5 Expenses 46 6 Income tax 47
7 Financial assets and liabilities 49
8 Non-financial assessment and liabilities 52 9 Equity 59 10 Cash flow information 62
Financial Risk
11 Introduction 64
Unrecognised items
12 Commitments, contingencies and guarantees 69
13 Events occurring after the reporting date 69
Other information
14 Related party disclosures 71
15 Share based payments 73
16 Remuneration of auditors 75
17 Earnings per share 76
18 Parent entity information 77
19 Subsidiaries 78
20 Summary of significant accounting policies 78
Directors’ declaration 90
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 39
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2019
2019 2018 Note $ $ Revenue 3 4,271,916 1,458,916
Other income 4 2,351,453 1,683,808
Cost of biological stock (888,998) (689,320)
Employee benefits – payroll and oncosts 5 (1,882,535) (1,375,402)
Employee benefits - share based payments 5 (880,968) (286,926)
Depreciation and amortisation expense 5 (688,911) (360,959)
Other expenses (1,795,451) (1,289,553)
IPO expenses - (391,642)
Finance costs (181,129) (52,900)
Profit/(Loss) before income tax 5 305,377 (1,303,978)
Income tax benefit/(expense) 6 - 161,349
Profit/(Loss) for the year 305,377 (1,142,629)
Other comprehensive income/(expense) - -
Total comprehensive income/(loss) for the year 305,377 (1,142,629)
Total comprehensive income attributable to:
Members of the Angel Seafood Holdings Limited 305,377 (1,142,629)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes, which form an integral part of the financial report.
Earnings per share (EPS)
Basic EPS (cents) 17 0.24 (1.18)
Diluted EPS (cents) 17 0.23 (1.13)
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 40
Consolidated Statement of Financial Position As at 30 June 2019
2019 2018 Note $ $ ASSETS
CURRENT ASSETS
Cash and cash equivalents 7(a) 530,237 3,957,345
Trade and other receivables 7(b) 525,817 249,801
Biological assets 8(a) 3,237,149 1,360,612
Other assets 8(d) 28,333 435,899
TOTAL CURRENT ASSETS 4,321,536 6,003,657
NON-CURRENT ASSETS
Biological assets 8(a) 919,720 102,141
Property, plant and equipment 8(b) 7,038,786 3,411,268
Intangible assets 8(c) 6,580,356 2,749,222
Other assets 8(d) 24,845 7,979
TOTAL NON-CURRENT ASSETS 14,563,707 6,270,610
TOTAL ASSETS 18,885,243 12,274,267
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 7(c) 569,344 169,030
Borrowings 7(d) 2,580,299 724,127
Employee benefits 8(e) 181,854 68,314
TOTAL CURRENT LIABILITIES 3,331,497 961,471
NON-CURRENT LIABILITIES
Trade and other payables 7(c) - 3,932
Borrowings 7(d) 3,218,319 176,743
Employee benefits 8(e) 30,443 13,482
TOTAL NON-CURRENT LIABILITIES 3,248,762 194,157
TOTAL LIABILITIES 6,580,259 1,155,628
NET ASSETS 12,304,984 11,118,639
EQUITY
Share Capital 9(a) 14,923,061 14,007,061
Reserves 9(b) 686,694 721,726
Accumulated losses (3,304,771) (3,610,148)
Total equity attributable to equity holders of the Company 12,304,984 11,118,639
TOTAL EQUITY 12,304,984 11,118,639
Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes, which form an integral part of the financial report.
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 41
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Share capital Reserves
Accumulated losses Total equity
$ $ $ $
Balance at 1 July 2018 14,007,061 721,726 (3,610,148) 11,118,639
Comprehensive profit for the year - - 305,377 305,377
Transactions with owners in their capacity as owners
Transfers from share based payments reserve on issue of shares 916,000 (916,000) - -
Share based payment expense recognised - 880,968 - 880,968
916,000 (35,032) - 881,453
Balance at 30 June 2019 14,923,061 686,694 (3,304,771) 12,304,984
Balance as at 1 July 2017 6,300,973 (432,000) (1,667,519) 4,201,454
Comprehensive loss for the year - - (1,142,629) (1,142,629)
Transactions with owners in their capacity as owners:
Common control reserve transferred to accumulated losses - 800,000 (800,000) -
Shares issued during the year 8,870,000 - - 8,870,000
Transaction costs (1,163,912) - - (1,163,912)
Share based payment reserve recognised - 353,326 - 353,326
Receipt of option issue proceeds - 400 - 400
7,706,088 1,153,726 (800,000)
Balance at 30 June 2018 14,007,061 721,726 (3,610,148) 11,118,639
Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes, which form an integral part of the financial report.
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 42
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
2019 2018 Note $ $ CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 4,116,552 1,499,798
Payments to suppliers and employees (4,401,535) (3,504,842)
R&D Tax Incentive 231,358 -
Interest received 7,449 14,122
Finance costs (165,754) (56,703)
Net cash (used in) operating activities 10 (211,929) (2,047,625)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for oyster lease (1,729,561) (486,535)
Purchase of property, plant and equipment (4,109,622) (1,861,798)
Payment of deposit for Cowell Oyster lease - (300,000)
Payment for other intangible assets - (14,542)
Proceeds from disposal of property, plant and equipment 74,400 105,688
Net cash (used in) investing activities (5,764,783) (2,557,187)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of shares - 8,000,400
Proceeds from convertible notes - 500,000
Repayment of related party loans - (8,773)
Proceeds from borrowings 1,941,145 -
Repayment of borrowings (642,172) (481,753)
Proceeds from finance leases - 23,100
Repayment of finance leases (190,352) (98,953)
Payments for capital raising costs - (727,513)
Payments for borrowing costs (26,816) -
Net cash provided by financing activities 1,081,805 7,206,508
Net (decrease)/increase in cash and cash equivalents (4,894,907) 2,601,696
Cash and cash equivalents at the beginning of the period 3,957,345 1,355,649
Cash and cash equivalents at the end of the period 7(a) (937,562) 3,957,345
Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes, which form an integral part of the financial report.
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 43
NOTES TO THE FINANCIAL STATEMENTS
HOW THE NUMBERS ARE CALCULATED
This section provides additional information about those individual line items in the financial statements that the directors consider most relevant in the context of the operations of the entity, including:
(a) accounting policies that are relevant for an understanding of the items recognised in the financial statements. These cover situations where the accounting standards either allow a choice or do not deal with a particular type of transaction;
(b) analysis and sub-totals, including segment information; and
(c) information about estimates and judgements made in relation to particular items.
Note How the numbers are calculated Page
1 Introduction 44
2 Segment information 45
3 Revenue 45
4 Other income 46
5 Expenses 46
6 Income tax 47
7 Financial assets and liabilities 49
8 Non-financial assets and liabilities 52
9 Equity 59
10 Cash flow information 62
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 44
NOTE 1. INTRODUCTION
Angel Seafood Holdings Ltd and its controlled entities (the “Consolidated Group” or “Group”) principle activity is the growing and sale of oysters.
The consolidated financial statements and notes represent those of Angel Seafood Holdings Ltd and its wholly controlled entities.
The financial statements were authorised for issue on 30 August 2019 by the Directors of the Company.
Basis of Preparation
These general-purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board. The Group is a ‘for-profit entity’ for financial reporting purposes under Australian Accounting Standards.
Compliance with IFRS
The Consolidated financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Historical cost convention
Except for cash flow information, the financial statements have been prepared on an accrual basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected current and non-current assets.
Accounting policies
Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.
Critical accounting estimates
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.
Parent entity information
The condensed separate financial information of the parent entity, Angel Seafood Holdings Ltd, has been presented within this financial report in Note 18.
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Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 45
NOTE 2. SEGMENT INFORMATION
The Group has one operating segment, being the multi-bay operations in South Australia that include oyster nursery and grow out operations in Cowell, and conditioning and finishing in Coffin Bay.
All of the Group’s activities are interrelated and financial information is reported to the Board (Chief Operating Decision Maker) encompassing the results of the Group on a consolidated basis, consistent with the presentation of the results in the statutory consolidated financial statements.
Geographical distribution of sales
2019 2018 $ $ Revenue from sales of oysters
- Australia 4,215,456 1,458,916
- Asia 56,460 -
Total revenue 4,271,916 1,458,916
85% of the Group’s sales in Australia were attributable to 2 major customers, each with more than 10% of the Group’s revenue (2018: 78% from 1 customer) .
NOTE 3. REVENUE
2019 2018 $ $ Revenue from sales of oysters 4,271,916 1,458,916
Total revenue 4,271,916 1,458,916
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 46
NOTE 4. OTHER INCOME
2019 2018 $ $ Fair Value adjustment – biological assets 1,868,307 852,025
R&D Tax Incentive 475,698 -
Interest income 7,448 14,122
Related party loan forgiven - 780,188
Sundry income - 37,473
Total other income 2,351,453 1,683,808
NOTE 5. EXPENSES
The result for the period was derived after charging the following items:
2019 2018 $ $ Employee benefits:
- Salaries and wages 1,339,794 1,082,570
- Directors fees 130,000 73,358
- Short term incentive payments 46,938 -
- Superannuation 139,630 112,853
- Leave entitlements 83,564 34,354
- Oncosts 142,609 72,267
Total payroll, benefits and oncosts 1,882,535 1,375,402
Share based payments 880,968 286,926
Total employee benefits and oncosts 2,763,503 1,662,328
Depreciation and amortisation:
Depreciation 684,495 356,495
Amortisation 4,416 4,464
Total depreciation and amortisation 688,911 360,959
Other expenses include the following:
Repairs and maintenance costs 219,576 156,591
Freight and cartage 220,947 79,796
Audit fees 46,241 75,770
Consultancy costs 328,596 217,395
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ANGEL SEAFOOD HOLDINGS LIMITED (ACN 615 035 366) 30 JUNE 2019
Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 47
NOTE 6. INCOME TAX
a) Income Tax expense
2019 2018
$ $
Current tax expense - -
Deferred tax expense - 161,349
Total tax benefit - 161,349
b) Numerical reconciliation of income tax to accounting profit/(loss):
2019 2018 $ $ Profit/(loss) from continuing operations before tax 305,377 (1,303,978)
Tax (expense)/benefit at Australian tax rate of 27.5% (83,979) 358,594
Tax effect of amounts that are not deductible/(taxable) in calculating taxable income
- R&D Tax incentive 130,817 -
- Share based payments (240,683) (78,905
- Research and development expenses (154,467) -
- (Under)/over provision in prior periods (218,290) -
- Other allowances 117,955 77,672
- Unrecognised losses from prior periods brought to account 448,647
- Tax losses not brought to account - (196,012)
Income tax benefit - 161,349
c) Deferred tax balances
2019 2018 $ $ Deferred tax assets
Finance lease liabilities 446,600 -
Employee benefit provisions 58,382 22,494
Accruals 5,775 18,211
Other deductible allowances 356,204 -
Tax losses 644,765 394,229
Total deferred tax assets 1,511,726 434,935
Deferred tax liabilities
Biological assets (858,043) (344,259)
Property plant and equipment (653,683) (90,676)
Total deferred tax liabilities (1,511,726) (434,935)
Net deferred tax balance - -
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Angel Seafood Holdings Ltd: Annual Report for the year ended 30 June 2019 48
Movement in net deferred tax balance
2019 2018 $ $ Opening balance - (161,349)
Movement credited to profit and loss - 161,349
Closing balance - -
d) Tax losses and unrecognised temporary differences
Due to inherent uncertainty surrounding forward forecasts in the primary industry, and therefore the Group’s ability to fully utilise tax losses in the future, a deferred tax asset on tax losses has only been recognised to the extent that it offsets deferred tax liabilities. The tax losses and temporary differences for which no deferred tax assets have been recognised are as follows:
2019 2018 $ $ Available tax losses for which no deferred tax asset is recognised
2,651,081 4,493,027
Potential tax benefit at 27.5% 729,047 1,235,582
Net deductible temporary differences for which no deferred tax asset has been recognised
- 290,676
Potential tax benefit at 27.5% - 79,936
The taxation benefits of utilised tax losses and temporary differences not brought to account will only be obtained if:
- the entities forming the consolidated entity derive assessable income of a nature and an amount sufficient for tax losses and future deductions to be offset against;
- the entities continue to comply with the condition for utilisation of tax losses imposed by law; and - no change in tax legislation affecting the availability and utilisation of losses.
Significant estimate and judgement - deferred tax assets Judgements and estimates are required when determining the recognition and measurement of deferred tax asset. The Group has recognised a deferred tax asset in relation to unused tax losses and deductible temporary differences only to the extent that this offsets deferred tax liabilities due to the inherent uncertainty surrounding forecasting taxable income in primary industries, and therefore the Group’s ability to fully utilise tax losses. The utilisation/recognition of tax losses in future periods will be recognised as a tax benefit in those future periods.
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NOTE 7: FINANCIAL ASSETS AND LIABILITIES
a) Cash and cash equivalents
2019 2018 $ $ Cash at bank 530,237 651,513
Short-term bank deposits - 3,305,832
530,237 3,957,345
The effective interest rate on short-term bank deposits for 2018 was 2.15%. These deposits had an average maturity of 30 days.
i) Reconciliation to cash flow statements
2019 2018 $ $ Cash and cash equivalents as stated above 530,237 3,957,345
Bank overdraft (working capital facility) (1,467,799) -
Cash and cash equivalents per cash flow statement (937,562) 3,957,345
b) Trade and other receivables
2019 2018 $ $ Current
Trade receivables 252,379 97,471
GST receivable 25,511 143,531
R&D Tax Incentive 244,339 -
Loan – Halman Family Trust (Oyster Lease) - 5,667
Other receivables 3,588 3,132
525,817 249,801
The receivables at reporting date have been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An allowance for credit loss is included for any receivable where the entire balance is not considered collectible. No allowance for credit loss is required as of 30 June 2019 (2018: Nil).
Additional Information in relation to financial risks concerning or with a potential impact on financial assets and liabilities is disclosed in Note 11 – Financial Risk Management.
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c) Trade and other payables
2019 2018 $ $ Current Trade creditors and accruals 336,292 95,163 Other payables 233,052 73,927 569,344 169,030 Non-current Related party payables – Halman Family Trust - 3,932 - 3,932
Trade and other payables are unsecured, non-interest bearing and are normally settled within 30 days. The carrying amounts are considered to be a reasonable approximation of fair value.
d) Borrowings
2019 2018 $ $ Current Secured liabilities Bank overdraft (Working Capital Facility) 1,467,799 - Bank loan facility 441,145 - Vendor finance liabilities 337,031 626,730 Lease liabilities 82,424 97,397 Unsecured liabilities Vendor finance liabilities 251,900 - 2,580,299 727,127 Non-current Secured liabilities Bank loan facility 1,500,000 - Lease liabilities 1,718,319 176,743 3,218,319 176,743
i. Bank Facilities
The Group has two revolving credit facilities with National Australia Bank (NAB); a Working Capital Facility (bank overdraft) of $2 million, and Business Expansion loan facility for $2 million. Both facilities are secured by a first claim over the Oyster Leases. Interest is incurred on the drawn down portion of these facilities at a floating interest rate. As at 30 June 2019 the interest rate on these facilities was 4.87% (2018: 5.52%).
Working Capital Facility – $2 million
This is a working capital facility renewable every year at the anniversary date, subject to an annual review. The next renewal date is 28/02/2020.
Business Expansion Loan Facility – $2 million
The loan facility limit (or balance, to the extent the facility has been drawn) will reduce to:
- $1.5m on or before 30 November 2019, - $1.0m on or before 30 November 2020, - $0 on or before 30 November 2021.
At 30 June 2019 the balance for this facility was $1,941,145 of which $441,145 has been classified as current, and $1,500,000 as non-current.
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ii. Lease liabilities
The contractual cash flow for lease arrangements are disclosed in the table below:
2019 2018 $ $ Finance lease commitments are payable as follows: Within 1 year 218,712 110,825
Later than 1 year but no later than 5 years 1,927,730 188,186
Later than 5 years - -
Minimum lease payments 2,146,442 299,011 Future interest charges (345,699) (24,871) Recognised lease liability 1,800,743 274,140 Made up of: Current 82,424 97,397 Non-current 1,718,319 176,743 Total lease liability 1,800,743 274,140
Lease liabilities are secured by the respective leased assets and incur interest at fixed rates between 5% and 9%.
iii. Vendor Finance Loans
The Group acquires water leases and other operating assets on deferred payments arrangements (Vendor financing). Such arrangements are individually negotiated with each vendor and where security is required, are secured by the respective assets acquired in that transaction. Vendor finance liabilities as at 30 June 2019 had repayments as follows:
- $251,900 no later than 31 July 2019;
- $225,000 no later than 30 August 2019; and
- $112,500 no later than 31 January 2020.
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NOTE 8. NON FINANCIAL ASSETS AND LIABILITIES
a) Biological assets
2019 2018 $ $ Live Oysters
Oyster stock – Spat 3,847,989 30,610
Oyster stock – On-grown 308,880 1,432,143
Total biological stock 4,156,869 1,462,753
Balance sheet classification:
Current 3,237,149 1,360,612
Non-current 919,720 102,141
Total biological stock 4,156,869 1,462,753
The closing balance includes a fair value adjustment of $3,120,158 (2018: $1,251,851)
The biological assets disclosed as a current asset are oysters that will be available to sell in the next 12-months (i.e. an adequate size for sale).
Reconciliation of biological assets
2019 2018 $ $ Stock value at the beginning of the year 1,462,753 1,019,333
Purchases/additions 1,714,807 287,594
Cost of sales (sales and mortality) (888,998) (696,199)
Net movement in fair value adjustment 1,868,307 852,025
Total biological stock 4,156,869 1,462,753
Significant estimates and judgements – Valuation of biological stock
Management value oysters held for sale at their fair value less costs to sell in accordance with AASB141 Agriculture. Estimated fair values are based on estimated selling prices observed in the industry and other relevant factors that ultimately impact fair value. Where there are no observable prices, management may determine a fair price based on certain deductions made on the closest comparable prices. These estimates may vary from net proceeds ultimately achieved.
There is inherent uncertainty in the biomass estimate and resultant fair valuation of the Biological assets. This is common to all such valuations and best practice methodology is used to facilitate reliable estimates. The estimated fair value of oyster inventory is based on a stock lifecycle model developed internally by the Group which incorporates various key assumptions to simulate stock growth which are regularly reviewed and updated. These assumptions include anticipated:
- Oyster prices less cost to sell
- Mortality rates
- Spawning cycles
- Seasonal growth rates
Actual growth will invariably differ to some extent, which is monitored along with mortality rates during periodic physical grading and harvest counts. Perpetual stock records are then adjusted and reconciled following the completion of each periodic physical count.
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Fair value hierarchy
AASB 13 Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level than an input that is significant to the measurements can be categorised into as follows:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 Unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included at level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3.
Valuation techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches:
i. Market approach uses prices and other relevant information generated by market transactions for identical or similar assets or liabilities.
ii. Income approach converts estimated future cash flows or income and expenses into a single discounted present value.
iii. Cost approach reflects the current replacement cost of an asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risk. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable.
The Group’s valuation of Biological Assets is considered to be Level 2 in the fair value hierarchy. A gain of $1,868,307 (2018: $852,025) has been recognised in the profit and loss as to measure the biological assets at fair value.
There were no transfers between levels of the fair value hierarchy during the year.
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b) Property plant and equipment
Land and buildings
Oyster lease infrastructure
Plant and equipment
Assets under construction Total
$ $ $ $ $ 2019
At 1 July 2018
Cost 1,067,028 797,140 1,638,195 489,609 3,991,972
Accumulated depreciation (2,188) (203,667) (374,849) - (580,704)
Net book amount 1,064,840 593,473 1,263,346 489,609 3,411,268
Financial year ended 30 June 2019
Opening net book amount 1,064,840 593,473 1,263,346 489,609 3,411,268
Additions 1,415,908 2,225,315 704,310 - 4,345,533
Disposals - - (33,520) - (33,520)
Transfers - 489,609 - (489,609) -
Depreciation (29,356) (462,893) (192,246) - (684,495)
Closing net book amount 2,451,392 2,845,504 1,741,890 - 7,038,786
At 30 June 2019
Cost 2,482,936 3,512,064 2,281,538 - 8,276,538
Accumulated depreciation (31,544) (666,560) (539,648) - (1,237,752)
Net book amount 2,451,392 2,845,504 1,741,890 - 7,038,786
2018
At 1 July 2017
Cost 603,259 465,508 1,319,038 - 2,387,805
Accumulated depreciation (911) (78,876) (144,422) - (224,209)
Net book amount 602,348 386,632 1,174,616 - 2,163,596
Financial year ended 30 June 2018
Opening net book amount 602,348 386,632 1,174,616 - 2,163,596
Additions 547,566 342,895 506,858 489,609 1,886,928
Disposals (83,797) (7,508) (191,456) - (282,761)
Depreciation (1,277) (128,546) (226,672) - (356,495)
Net book amount at end of year 1,064,840 593,473 1,263,346 489,609 3,411,268
At 30 June 2018
Cost 1,067,028 797,140 1,638,195 489,609 3,991,972
Accumulated depreciation (2,188) (203,667) (374,849) - (580,704)
Net book amount 1,064,840 593,473 1,263,346 489,609 3,411,268
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Leased assets and assets pledged as security
Property plant and equipment includes equipment of $202,256 (2018: $273,739) that is held through a finance lease arrangement. The leased equipment is also encumbered as security for the corresponding lease liabilities of $176,742 (2018: $273,870)
Subsequent to year end, the company secured asset finance through a Hire Purchase agreement for one of its new vessels. This vessel with book value of $380,749 is now pledged as security for the liability of $350,000.
Significant estimates and judgments - recoverability of property, plant and equipment
The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the Group that may be indicative of impairment (impairment indicators). If impairment indicators are noted, management performs an impairment assessment by comparing recoverable value (higher of value in use and fair value less cost to sale) of assets to their carrying values, at the individual asset level or for the respective cash generating unit (CGU). Where the carrying value of an asset or CGU exceeds its recoverable value, an impairment loss is recognised to reduce the carrying value to the recoverable value. There were no impairment indicators noted for property plant and equipment.
Subsequent to year end the Group disposed of some surplus assets which included property plant and equipment. Refer to Note 13.
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c) Intangible Assets
Oyster leases
Other intangible
assets Total
$ $ $
2019
At 1 July 2018
Cost 2,734,149 22,323 2,756,472
Accumulated amortisation - (7,250) (7,250)
Net book amount 2,734,149 15,073 2,749,222
Financial year ended 30 June 2019
Net book amount at the beginning of the year 2,734,149 15,073 2,749,222
Additions 3,898,050 - 3,898,050
Disposals (62,500) - (62,500)
Amortisation - (4,416) (4,416)
Net book amount at end of year 6,569,699 10,657 6,580,356
At 30 June 2019
Cost 6,569,699 22,323 6,592,022
Accumulated amortisation - (11,666) (11,666)
Net book amount 6,569,699 10,657 6,580,356
2018
At 1 July 2017
Cost 1,752,300 13,932 1,766,232
Accumulated depreciation (2,786) (2,786)
Net book amount 1,752,300 11,146 1,763,446
Financial year ended 30 June 2018
Net book amount at the beginning of the year 1,752,300 11,146 1,763,446
Additions 981,849 8,391 990,240
Amortisation - (4,464) (4,464)
Net book amount at end of year 2,734,149 15,073 2,749,222
At 30 June 2018
Cost 2,734,149 22,323 2,756,472
Accumulated amortisation (7,250) (7,250)
Net book amount 2,734,149 15,073 2,749,222
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Leased assets and assets pledged as security
Oyster leases include leases of $1,803,025 (2018: Nil) that are held through a finance lease arrangement. These leases are encumbered as security for the corresponding lease liability of $1,624,000 (2018: Nil)
Significant estimates and judgements - Impairment testing of intangible assets with indefinite lives
For intangible assets with a finite life, at the end of each reporting period, management assess whether there are any indications that an asset may be impaired (i.e. its carrying amount may be higher than its recoverable amount).
For intangible assets with an indefinite life, for impairment testing purposes, the Group identifies its cash generating unit (CGU) which is the smallest identifiable group of assets that generate cash inflows largely independent of the cash inflows of other assets of the Group.
Oyster leases are considered to be intangible assets with indefinite useful lives on the basis of reasonable expectation that they can be renewed at the end of each lease period for the foreseeable future. Consequently, Oyster leases are not amortised but are tested for impairment each reporting period in accordance with AASB 136 Impairment of Assets. Management have determined that there is one CGU.
The recoverable amount of the CGU is determined based on value in use. Value in use is calculated using a discounted cash flow model covering a five-year period with an appropriate terminal growth rate at the end of that period for the CGU. The model is based upon an estimated future five-year cash flow forecast, incorporating budgets for the first three years, a two-year forecast period, and a terminal value calculation in the fifth year, with the following key inputs.
Key assumptions
2019 2018 % % Average growth rate over forecast period 11.0 3.0
Terminal value growth rate 2.5 2.5
Post tax discount rate 12.6 13.2
Management believes that any reasonable possible change in the key assumptions would not cause the carrying amount of the CGU to exceed the recoverable amount. At each reporting date the directors review intangible assets for impairment. No impairment was assessed as necessary in 2019 (2018: Nil).
Subsequent to year end the Group disposed of some surplus assets which included oyster leases. Refer to Note 13.
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d) Other assets
2019 2018 $ $ Current
Prepayments 28,333 129,748
Deposit – Cowell asset acquisition - 306,151
28,333 435,899
Non-current
Borrowing costs 23,845 7,979
Deposits 1,000 -
24,845 7,979
e) Employee benefits provisions
2019 2018 $ $ Current
Annual leave provision 134,916 68,314
Short term incentive 46,938 -
181,854 68,314
Non-current
Long service leave provision 30,443 13,482
30,443 13,482
The current portion for this provision includes the total amount accrued for annual leave entitlements. Based on past experience, the Group does not expect the full amount of annual leave classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since the Group does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service.
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NOTE 9. EQUITY
a) Share capital
2019 2018 2019 2018 SHARES SHARES $ $ Issued and fully paid ordinary shares 131,849,640 125,577,900 16,809,853 15,893,853
Share issue costs (1,886,792) (1,886,792)
14,923,061 14,007,061
i. Movements in share capital (excluding share issue costs)
NUMBER OF SHARES
AVERAGE ISSUE PRICE TOTAL
$ $ Year ended 30 June 2019
Opening balance 125,577,900 15,893,853
Issue of new shares:
- Equity settled remuneration 6,271,740 0.15 916,000
Closing balance 131,849,640 16,809,853
Year ended 30 June 2018
Opening balance 53,701,933 7,023,853
Ordinary shares issued during the period prior to the reorganisation 100,000 0.20 20,000
Shares issued on reorganisation (3 for 2) 26,900,967 - -
Balance following reorganisation 80,702,900 7,043,853
Ordinary shares issued at IPO 40,000,000 0.20 8,000,000
Ordinary shares issued to founder under Employee Incentive Scheme 500,000 0.20 100,000
Ordinary shares issued to lead manager upon IPO 1,250,000 250,000
Ordinary shares issued on conversion of convertible note 3,125,000 500,000
Balance at period end 125,577,900 15,893,853
ii. Ordinary shares
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Company. On a show of hands at meetings of the Company, each holder of ordinary shares has one vote in person or by proxy, and upon a poll each share is entitled to one vote.
The Company does not have authorised capital or par value in respect of its shares.
iii. Options
For information relating to share options issued to key management personnel during the financial year, refer to the Remuneration Report.
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iv. Capital management
The key objectives of the Company when managing capital is to safeguard its ability to continue as a going concern and maintain optimal benefits to stakeholders. The Company defines capital as its equity and net debt.
The Company manages its capital structure and makes funding decisions based on the prevailing economic environment and has a number of tools available to manage capital risk. These include maintaining a diversified debt portfolio, the ability to adjust the size and timing of dividends paid to shareholders and the issue of new shares.
v. Transaction costs
The Company raised capital during the year ended 30 June 2018. Transaction costs directly associated with the capital raising were recorded directly in equity as a reduction to issued capital. Total transactions costs for that period were $1,163,912, including an amount of $186,400 being the fair value of options and $250,000 being share based payments issued to parties as consideration for capital raising services.
vi. Capital reorganisation
On 31 October 2017 the Company reorganised its capital by way of a 3 for 2 share split. Following the reorganisation there were a total of 80,702,900 ordinary shares on issue.
b) Reserves
2019 2018 $ $ Share based payments reserve 686,694 721,726
686,694 721,726
i. Movements in reserves
Share based payment
reserve Common
Control Reserve Total $ $ $ Year ended 30 June 2019
Opening balance 721,726 - 721,726
Share based payments expense 880,968 - 880,968
Transfer to share capital on issue of shares (916,000) - (916,000)
Closing balance 686,694 - 686,694
Year ended 30 June 2018
Opening balance 368,000 (800,000) (432,000)
Share based payments expense 353,726 - 353,726
Transfer to accumulated losses - 800,000 800,000
Closing balance 721,726 - 721,726
ii. Share based payments reserve
This reserve records, in accordance with AASB 2 Share-based Payments, the allocated fair value at grant date of share rights that have been granted and remain outstanding at the reporting date. The value determined is recognised evenly over the financial years in which services are provided as specified by the performance period for each grant of share options or rights, subject to subsequent revision of the number of share rights expected to vest and the number that ultimately vest. The recognised value of share rights that vest and are exercised is transferred to share capital on the issue of shares.
The specific details of each tranche of options, performance rights and performance shares on issue are detailed in Note 15.
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iii. Common Control Reserve
The Common Control Reserve originated from the acquisition of the business of the Halman Family Trust. The business acquisition was determined to be under common control and the common control reserve represented the excess of consideration over the net assets acquired. The balance of the Common Control Reserve was subsequently recycled to Accumulated Losses following the Debt for Equity Swap transaction in prior year.
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NOTE 10. CASH FLOW INFORMATION
a) Reconciliation of net profit/(loss) for the year to net cash flow from operating activities:
2019 2018 $ $ Profit/(loss) for the year 305,377 (1,142,629)
Cash flows excluded from profit attributable to operating activities
Non-cash flows in profit:
- amortisation 4,416 4,464
- depreciation 684,495 356,495
- finance costs 109,877 1,468
- loss on sale of fixed assets 21,619 88,454
- loans forgiven - (780,188)
- share based payments 880,968 286,926
- (gain) on revaluation of biological assets (1,868,307) (852,025)
Changes in assets and liabilities:
- (increase) in trade and other receivables (276,016) (98,744)
- (increase) in capitalised borrowing costs (27,333) (5,271)
- (increase) in rental bonds - (2,692)
- (increase)/decrease in biological assets (573,909) 408,605
- (increase) in current tax receivables - 713
- (increase) in deferred tax assets - 26,876
- increase in trade and other payables 396,382 (186,207)
- increase in deferred tax liability - (188,225)
- increase in employee benefits 130,502 34,355
Cashflows from operations (211,929) (2,047,625)
Non-cash financing and investing activities
The following investing and financing activities did not have a direct impact on the current year cash flows:
2019 2018 $ $ Capital raising costs paid in shares - 186,400
Purchases of assets under vendor finance arrangements 589,400 -
Purchases of assets under finance lease arrangements 1,632,000 -
2,221,400 186,400
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FINANCIAL RISK
This section of the notes discusses the group’s exposure to various risks and shows how these could affect the group’s financial position and performance.
Note Financial Risk Page 11 Financial Risk Management 64
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NOTE 11. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, leases and related party loans.
The totals for each category of financial instruments, measured in accordance with AASB 9: Financial Instruments as detailed in the accounting policies to these financial statements, are as follows:
2019 2018 $ $ Financial assets at amortised cost
Cash and cash equivalents 530,237 3,957,345
Trade and other receivables 525,817 249,801
1,056,054 4,207,146
Financial liabilities at amortised cost
Trade and other payables 569,344 172,962
Borrowings 5,798,618 900,870
6,367,962 1,073,832
a) Financial Risk Management Policies
The Board and the Board’s Audit and Risk Committee are responsible for managing financial risk exposures of the Group. The Board monitors the Group’s financial risk management policies and exposures and approves financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating to counterparty credit risk, liquidity risk and interest rate risk. The Audit and Risk Committee reports to the Board and minutes of the Committee’s meetings are reviewed by the Board.
The Company’s overall risk management strategy seeks to assist the Consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance.
b) Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are liquidity risk, credit risk, and market risk consisting of interest rate risk. There have been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or the Board’s objectives, policies and processes for managing or measuring the risks from the previous period.
Angel Seafood Holdings Ltd & Controlled Entities does not actively engage in the trading of financial assets for speculative purposes.
The principal categories of financial instruments used by the Group are: i. Trade receivables ii. Cash at bank
iii. Trade and other payables iv. Borrowings, comprising bank facilities, finance leases and vendor finance
Risk exposure and mitigation strategies for specific risks faced are described below:
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I. Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
i. preparing forward-looking cash flow analyses in relation to its operating, investing and financing activities;
ii. monitoring undrawn credit facilities;
iii. obtaining funding from a variety of sources;
iv. maintaining a reputable credit profile;
v. managing credit risk related to financial assets;
vi. only investing surplus cash with major financial institutions; and
vii. comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The Group’s ability to continue operating its business and execute its business plan over time will depend on its ability to generate free cash flow, to raise funds for operations and growth activities, and to service, repay or refinance debts as they fall due. The Group’s operations are subject to a number of operational and environment risks inherent to primary industries and the nature of biological stock which may ultimately have an impact on the Group’s cash flows and liquidity. The Group considers that it has both internal and external options to manage Group liquidity should need arise, including raising additional funding through debt and/or equity.
a) Financing arrangements
At 30 June 2019, the company has access to the following undrawn revolving credit facilities:
2019 2018 $ $ Bank overdraft (working capital facility) 532,201 800,000
Bank loan facility 58,855 -
591,056 800,000
The working capital facility has a limit of $2,000,000 (2018: $800,000), of which $1,467,799 was drawn down at 30 June 2019 (2018: Nil). Funds may be drawn and repaid at any time without notice. The facility is renewed annually subject to a review by the bank.
The bank loan has a limit of $2,000,000 which will reduce to $1,500,000 on 30 November 2019, $1,000,000 on 30 November 2020 and expires 30 November 2021. Funds may be drawn and repaid at any time without notice.
b) Maturity of financial liabilities
The table below reflects an undiscounted contractual maturity analysis for financial liabilities (excluding bank revolving facilities that have not fixed cash flow profiles).
Less than 6
months Between
6-12 months Between 1-2 years
Between 2-5 years
Total contractual
cash flow Carrying amount
$ $ $ $ $ 30 June 2019
Non-derivatives
Trade creditors and other 569,344 - - - 569,344 569,344
Borrowings
Vendor finance 479,713 112,968 - - 592,681 588,931
Lease liabilities 119,357 99,355 209,208 1,718,522 2,146,442 1,800,743
Total non-derivatives 1,168,414 212,323 209,208 1,718,522 3,308,467 2,959,018
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Less than 6
months Between
6-12 months Between 1-2 years
Between 2-5 years
Total contractual
cash flow Carrying amount
$ $ $ $ $ 30 June 2018
Non-derivatives
Trade creditors and other 169,030 - - - 169,030 169,030
Amounts due to related parties - - 3,932 - 3,932 3,932
Borrowings
Vendor finance 26,730 600,000 - - 626,730 626,730
Lease liabilities 48,698 48,699 89,877 86,866 274,140 274,140
Total non-derivatives 244,467 648,699 93,809 86,866 1,073,841 1,073,832
The group does not have any Financial Guarantees to external parties.
II. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such as the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Credit terms are generally 14 to 30 days from the invoice date.
Credit risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Audit and Risk Committee or Board has otherwise assessed as being financially sound. Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through taking trade deposits from prospective customers, title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default.
Credit Risk Exposures
The Group’s main exposure to credit risk is in relation to receivables and deposits placed with financial institutions or suppliers. Trade receivables consist of a small number of customers. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that may be past due.
Amounts are considered as 'past due' when the debt has not been settled, within the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there is objective evidence indicating that the debt may not be fully repaid to the Group.
As at 30 June 2019, there were no receivables that were past due (2018: Nil) and there were no expenses recognised during the financial year then ended for the write-off of receivables or provision for doubtful debts (2018: Nil).
All the Groups bank balances are held with National Australia Bank (NAB) which has a Standard & Poors (S&P) credit rating of ‘AA-‘.
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III. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
(i) Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. The financial instruments that expose the Group to interest rate risk are limited to cash and cash equivalents.
Interest rate risk is managed using a mix of fixed and floating rate debt. At 30 June 2019, 54% of the Group debt is subject to a floating rate (2018: 0%).
The Group also manages interest rate risk by ensuring that, whenever possible, payables are paid within any pre-agreed credit terms.
The net effective variable interest rate borrowings (i.e. unhedged debt) expose the Group to interest rate risk, which will impact future cash flows and interest charges and is indicated by the following floating interest rate financial liabilities:
2019 2018 $ $ Non-derivative Floating rate liabilities
Bank facilities 3,408,944 -
3,408,944 -
(ii) Group sensitivity to interest rates
Based on the floating rate financial liabilities and assets held by the group at 30 June 2019, the following table shows the sensitivity of the Group’s results to potential changes in the interest rate.
2019 2018 $ $ Increase/(decrease) in profit after tax
Interest rate 1% higher (17,108) -
Interest rate 1% lower 17,108 -
Impact on equity (other than accumulated losses)
Interest rate 1% higher - -
Interest rate 1% lower - -
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UNRECOGNISED ITEMS
This section of the financial statements provides information about items that are not recognised in the financial statements as they do not yet satisfy recognition criteria.
Note Unrecognised items Page 12 Commitments, Contingencies and other guarantees 69
13 Events occurring after the reporting date 69
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NOTE 12. COMMITMENTS, CONTINGENCIES AND OTHER GUARANTEES
a) Capital Expenditure Commitments
Significant capital expenditure contracted for at the end of the period but not recognised as assets and liabilities is as follows:
2019 2018 $ $ Plant and equipment purchases - 126,817
Cowell assets acquisition - 2,700,000
- 2,826,817
b) Operating leases
Non-cancellable operating leases contracted for but not recognised in the financial statements
2019 2018 $ $ Minimum lease payments:
Within 1 year 109,257 124,293
Later than 1 year but no later than 5 years 232,743 90,606
342,000 214,899
c) Contingencies and guarantees
The Group does not have any contingent liabilities and has not provided any guarantees.
NOTE 13. EVENTS OCCURRING AFTER THE REPORTING DATE
The following events occurred subsequent to the reporting date have not been accounted for in the financial statements:
Acquisition of additional water in Coffin Bay and Smoky Bay assets disposal
On 25 July 2019, the Group entered into an agreement with Mr Gregory Lawrence to acquire 1.5Ha of quality water in Coffin Bay for $600,000. The additional water will be used to increase finishing capacity to expand existing grow out areas. A deposit of $120,000 was paid in July on signing the agreement with the balance payable in two tranches; $180,000 payable on 18 December 2019 and $300,000 on 1 July 2020, with outstanding balances accruing interest at 6% per annum.
On the same day, the Group announced it had entered in to agreements to sell its assets in Smoky Bay, consisting of 1.3Ha of water leases and on-land infrastructure and equipment, for a total of $450,000. The disposed assets had a carrying book value of $307,239.
Hire Purchase agreement
On 22 July 2019, the Group finalised settlement for its asset finance facility under a hire purchase agreement with the NAB for its newest and recently commissioned big vessel Angel VI and received $350,000. The Hire Purchase facility will be repaid in 60 equal monthly instalments of $6,480 commencing in August 2019.
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OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards and other pronouncements, but that is not immediately related to individual line items in the financial statements.
Note Unrecognised items Page 14 Related party disclosures 71
15 Share based payments 73
16 Remuneration of auditors 75
17 Earnings per share 76
18 Parent entity financial information 77
19 Subsidiaries 78
20 Summary of significant accounting policies 78
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NOTE 14. RELATED PARTY DISCLOSURES
a) Ultimate parent
Angel Seafood Holdings Limited is the ultimate holding company of the group.
b) Subsidiaries
Interests in subsidiaries are set out in Note 19.
c) Key Management Personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel (KMP). Detailed remuneration disclosures are provided in the Remuneration Report.
Remuneration paid to KMP of the Group for the year is as follows:
2019 2018 $ $ Short term employee benefits 486,335 251,394
Post-employment benefits 37,613 19,002
Other long term benefits 1,850 582
Share based payments 864,968 286,926
1,390,766 557,904
Short-term employee benefits These amounts include fees and benefits paid to the non-executive Chairman and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.
Post-employment benefits These are company contributions to superannuation funds of the respective KMP.
Other long-term benefits These amounts represent long service leave benefits accruing during the year.
Share-based payments These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, rights and shares granted on grant date. Further information in relation to KMP remuneration can be found in the Remuneration Report.
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d) Transactions with other related parties:
Transactions with related parties, other than KMP in their capacity as KMP, are set out below:
2019 2018 $ $ Purchases of goods and services Interract Business Consulting Pty Ltd (1) - 109,981
B5 Partners Pty Ltd (2) - 5,000
Michael Porter (3) 2,500 60,600
Salaries and wages
K Halman (4) 106,360 93,754
C Goldsmith (5) 3,545 -
Interest expense
Halman Family Trust (6) - 11,553
112,405 280,888 (1) James Rogalski is a Director of Interacct Business Consulting Pty Ltd. He provides accounting, taxation and advisory services to the Group. James
Rogalski resigned as a director on 21 February 2018. (2) Boris Bosnich is a Director of B5 Partners Pty Ltd. Payments made to B5 Partners Pty Ltd were in respect of consulting services provided by him.
Boris Bosnich resigned as a director on 11 August 2017. (3) Michael Porter provided consulting services to the Group in addition to his role as a Non-Executive Director. (4) Kady Halman is the spouse of Isaac Halman and is employed in the business under a commercial employment relationship. (5) Claire Goldsmith is a close family member to Tim Goldsmith, Non-Executive Chairman, and was temporarily employed by the business under a
commercial employment relationship. (6) Isaac Halman is a beneficiary of the Halman Family Trust.
e) Outstanding balances arising from transaction with related parties
2019 2018 $ $ Trade and other payables - 11,000
Other assets - 5,667
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NOTE 15. SHARE BASED PAYMENTS
a) Types of share based payment plans
The Group has a Performance Rights and Option Plan in existence which forms an important part of a comprehensive remuneration strategy for the Company’s Directors and employees, and align their interests with those of shareholders by linking rewards to the long term success of the Company and its financial performance.
Measurement
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and earnings per share growth targets and performance conditions).
All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share based payment reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share rights expected to vest. Non-market vesting conditions are included in assumptions about the number of share options or rights that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options or rights expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options or rights ultimately exercised are different to that estimated on vesting. Upon exercise of share options or rights, the proceeds received and the accumulated amount in the share options or rights reserve applicable to those share options or rights, net of any directly attributable transaction costs, are allocated to share capital.
Other ‘non-employee’ share based payments arrangements
The Group may also issue equity instruments as settlement for goods and services provided by external parties. In these case, the equity instruments are measured with reference to the value of the goods and/or services provided.
b) Summary and movement of options on issue
The table below summarises the number, weighted average exercise prices and movements in Options on issue during the financial year:
2019 2018 Weighted
average exercise price ($)
Number of options
Weighted average exercise price ($)
Number of options
Balance at the beginning of the year 0.1746 12,000,000 0.0833 6,000,000
Granted during the year 0.2800 1,200,000 0.2667 6,000,000
Balance at the end of the year 0.1842 13,200,000 0.1746 12,000,000
Vested and exercisable at end of the year 0.1746 12,000,000 0.1746 12,000,000
Each option is convertible into one ordinary share. There are no voting or dividend rights attached to the options. Voting and dividend rights will attach to the ordinary share when the options have been exercised.
Options granted during the year will vest upon completion of the service condition. Refer to Remuneration Report.
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Share options outstanding at the end of the financial year have the following expiry dates and exercise prices:
2019 2018 Grant date Expiry date Exercise price ($) Number Number 20 Apr 2017 28 Feb 2021 0.0833 6,000,000 6,000,000
8 Feb 2018 28 Feb 2022 0.2000 4,000,000 4,000,000
8 Feb 2018 28 Feb 2022 0.4000 2,000,000 2,000,000
7 May 2019 25 Feb 2022 0.2800 1,200,000 -
13,200,000 12,000,000
Weighted average remaining contractual life of options outstanding at the end of the year 1.8 years 2.7 years
Fair value of options granted
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date are as follows:
Grant date Expiry date
Share price at grant date($)
Exercise price ($)
Expected volatility(1)
Dividend yield
Risk free interest
rate
Fair value at grant
date 7 May 2019 25 Feb 2022 0.17 0.28 71% - 1.08% 0.0827
(1) Expected volatility is based on the historical market share prices for the Group and selected peer companies over a 12 month period prior to the grant date.
c) Summary and movement of performance shares and rights 2019 2018 Number Number Balance at the beginning of the year 5,500,000 -
Granted during the year 1,000,000 5,500,000
Exercised and converted to shares (4,500,000) -
Balance at the end of the year 2,000,000 5,500,000
Vested and exercisable at end of the year - -
1,000,000 performance rights were issued in accordance with the Performance Rights and Option Plan on 7 May 2019, with a fair value of $0.20 per unit and the same vesting conditions as existing performance shares.
Vesting of the 2,000,000 performance rights and shares outstanding at 30 June 2019 is subject to the following performance hurdles all being achieved in a single financial year up to and including the financial year ending 30 June 2022 as determined by the audited financial statements:
- annual sales revenue of at least $8 million (excluding fair value adjustments),
- a positive cash flow for the financial year; and
- a net profit before tax of greater than or equal to $0.0266 earnings per share.
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d) Expenses arising from share based payments transactions
Total expenses arising from share based payments transactions recognised during the financial year were as follows:
2019 2018 $ $ Recognised in profit and loss
Employee Share Scheme
- Share options 37,134 14,400
- Performance shares and rights 827,834 152,526
- Ordinary shares granted 16,000 120,000
Total employee benefits 880,968 286,926
Other equity settled transactions - 66,400
880,968 353,326
NOTE 16. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by the auditors of the Group, its related practices.
2019 2018 $ $ Audit services
Auditing/reviewing the financial statements for Company 45,341 28,270
Auditing/reviewing the financial statements for Halman Family Trust
- 13,500
Total audit fees 45,341 41,770
Non-audit Services
- preparation of the independent accountant’s report - 34,000
- Agreed Upon Procedures 900
Total fees paid to William Buck and associates 46,241 75,770
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NOTE 17. EARNINGS PER SHARE
2019 2018 Cents Cents Earnings/(loss) per share
Basis earnings/(loss) per share 0.24 (1.18)
Diluted earnings/(loss) per share 0.23 (1.13)
a) Reconciliation of earnings used in calculating basic and diluted earnings per share
2019 2018 $ $ Basic earnings/(loss)
Profit/(loss) attributable to ordinary shareholders of the Group used in calculating basic earnings/(loss) per share 305,377 (1,142,629)
Diluted earnings/(loss)
Profit/(loss) attributable to ordinary shareholders of the Group used in calculating diluted earnings/(loss) per share 305,377 (1,142,629)
b) Weighted average number of shares used as denominator to calculate basic and diluted earnings per share
2019 2018 $ $ Assets
Weighted average number of ordinary shares used in calculating basic earnings per share 127,935,682 96,640,160
Weighted average number of dilutive options outstanding 3,436,923 2,932,638
Weighted average number of dilutive performance shares outstanding - 1,658,904
Weighted average number of ordinary shares used in calculating diluted earnings per share 131,372,605 101,531,702
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NOTE 18. PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements of the parent entity, Angel Seafood Holdings Limited, prepared on the same basis as the consolidated financial statements, show the following aggregate amounts.
2019 2018 $ $ Assets
Current assets 252 3,897,054
Non-current assets 13,470,034 9,811,675
Total assets 13,470,287 13,708,729
Liabilities
Current liabilities 27,077 7,655
Non-current liabilities - 3,932
Total liabilities 27,077 11,587
Net assets 13,443,210 13,697,142
Equity
Share capital 14,923,061 14,007,061
Reserves 686,294 721,726
Accumulated losses (2,166,145) (1,031,645)
Total equity 13,443,210 13,697,142
Loss after income tax for the year (1,134,901) (74,235)
Other comprehensive income -
Total comprehensive income for the year (1,134,901) (74,235)
Contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June 2019.
Contractual commitments
The parent entity did not have any contractual commitments as at 30 June 2019.
Guarantees
The parent entity has provided a guarantee and indemnity for the Group’s loan facility with the National Australia Bank. F
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NOTE 19. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the policy for consolidation set out in Note 20.
Percentage of equity interest
held by the group Principal place of business 2019 2018 Angel Oysters Australia Pty Ltd Port Lincoln, SA, Australia 100% 100%
Angel Seafood Infrastructure Pty Ltd Port Lincoln, SA, Australia 100% 100%
The subsidiaries listed above have share capital consisting solely of ordinary shares which are held directly by the Group. The proportion of ownership interests held equals the voting rights held by the Group. Each subsidiary’s principle place of business is also its country of incorporation.
NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles for consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Angel Seafood Holdings Ltd) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 19.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
b. Income Tax The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income).
Current income tax expense charged to profit or loss is the tax payable on taxable income for the current period. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss or arising from a business combination.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised, or the liability is settled, and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the entity in a business model whose objective is to consume substantially all of the economic benefits embodied in the property through use over time (rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such property will be recovered entirely through use.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where:
i. a legally enforceable right of set-off exists; and ii. the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
c. Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are disclosed in the relevant notes to the financial statements as significant estimates and judgments.
d. Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset – but not the legal ownership – are transferred to entities in the Consolidated Group, are classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
e. Revenue and other income
Revenue is measured based on the consideration specified in a contract with a customer. Revenue from the sale of goods and a corresponding receivable is recognised at the point of delivery of goods to the customer as this corresponds to the transfer of control and ownership. At this point, the Group's right to consideration is deemed unconditional, as only the passage of time is required before payment of that consideration is due. There is no significant financing component in revenue because sales (which include those with volume discounts) are made within a credit term of 15 to 45 days.
Interest revenue is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax (GST).
f. Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for credit loss.
g. Trade and other payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.
h. Finance Costs
Finance costs include all interest-related expenses, other than those arising from financial assets at fair value through profit or loss. Fees and charges incurred in the syndication of borrowing facilities are capitalised and amortised over the expected life of the respective facility. The amortisation expense is included in finance costs.
i. Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
j. Goods and Services Tax (GST)
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position.
Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
k. Property, plant and equipment
Each class of property, plant and equipment is carried at cost, where applicable, any accumulated depreciation and impairment losses.
Property
Property includes freehold land, buildings and other property improvements on the land. Freehold land is carried at cost less any impairment write down. Land is not depreciated as it is considered to have an indefinite useful life. Buildings and other property improvements are measured on the cost basis and therefore carried at cost less accumulated depreciation, and any accumulated impairment. In the event the carrying amount of freehold land and buildings is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present.
Plant and Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
k. Property, plant and equipment (continued)
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Consolidated Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the Consolidated Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable asset are shown below:
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in the period in which they arise.
l. Intangible Assets
Oyster Leases
Oyster leases are measured on the cost basis and therefore carried at cost less any accumulated impairment. In the event the carrying amount of an oyster lease is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. Oyster leases have indefinite useful lives and an impairment assessment is performed annually and whenever there is indication that the assets may be impaired.
Fixed asset class Depreciation rate Plant and Equipment 5%-50% Computer Software 25% Buildings and property improvements 2.5%-5%
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
l. Intangible Assets (continued)
The Group’s Government awarded oyster leases are classified as ‘production leases’ by the Department of Primary Industries and Regions SA (PIRSA) and are granted for a maximum term of 20 years. Upon the expiry of any given term, they are renewable for successive terms and the Group considers that the risk of any of its oyster leases not being renewed at the end of their current terms to be immaterial. As such, the useful life of the leases is considered to be indefinite and no amortisation is applied.
The carrying amount of oyster leases are reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than oyster leases, from the date that they are available for use.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
m. Impairment of assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information.
If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss.
Intangible assets with indefinite useful lives are tested for impairment at each reporting period.
n. Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the entity commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied. F
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
n. Financial Instruments (continued)
Classification and subsequent measurement
Financial liabilities
Financial instruments are subsequently measured at amortised cost; or fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the financial liability is:
- a contingent consideration of an acquirer in a business combination to which AASB 3 : Business Combinations applies;
- held for trading; or - initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition.
Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of a designated hedging relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other comprehensive income and are not subsequently reclassified to profit or loss. Instead, they are transferred to retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income enlarges or creates an accounting mismatch, then these gains or losses should be taken to profit or loss rather than other comprehensive income.
A financial liability is derecognised when it is extinguished (i.e. when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
Financial assets
Financial assets are subsequently measured at amortised cost, fair value through other comprehensive income; or fair value through profit or loss. Measurement is on the basis of the contractual cash flow characteristics of the financial asset and the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
- the financial asset is managed solely to collect contractual cash flows; and - the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income:
- the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates;
- the business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
n. Financial Instruments (continued)
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss.
The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised.
A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated future cash flows of the financial asset(s).
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults. Impairment of trade receivables is determined using the simplified approach in AASB 9 which uses an estimation of lifetime expected losses.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Group recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered.
o. Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional currency.
p. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents comprise cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdraft are shown within borrowings, in current liabilities, in the statement of financial position.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
q. Biological Assets
Biological assets consist of oysters. These assets have been measured at fair value less costs to sell in accordance with AASB141 Agriculture. Estimated fair values are based on a stock lifecycle model developed by the Group which incorporates various key assumptions. These assumptions include anticipated:
- Oyster prices less cost to sell - Mortality rates - Spawning cycles - Seasonal growth rates
These assumptions are updated regularly, and the fair value increments or decrements are recorded in the statement of profit or loss and other comprehensive income.
r. Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages and salaries. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages and salaries are recognised as part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service.
Other long-term employee benefits are measured at present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12-months after the end of the reporting period, in which case the obligations are presented as current provisions.
s. Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
t. Share-based payments
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and earnings per share growth targets and performance conditions).
u. Segment reporting
For management purposes the Group is organised in one operating segment being the production and sale of oysters in Australia. Financial information of the Group is reported to the Board (Chief Operating Decision Maker) as a single segment. All material operating decisions are based on analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.
v. Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements is presented.
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NOTE 20. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
w. New Accounting Standards and Interpretations
New standards adopted by the Group
The Group has applied the following standards for the first time in the year ended 30 June 2019:
- AASB 9 Financial Instruments
- AASB 15 Revenue from contracts with customers
The adoption of these standards did not result in any material changes to the Group’s results or its financial position in both the current year and the comparative period.
New standards and interpretations not yet adopted by the group
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:
– AASB 16 Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117 Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows: i. recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12
months of tenure and leases relating to low-value assets);ii. depreciation of right-of-use assets in line with AASB 116 Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;iii. inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;iv. application of a practical expedient to permit a lessee to elect not to separate non-lease components and
instead account for all components as a lease; andv. inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. AASB 16 also allows the use of practical expedients for recognition of contracts previously classified as operating leases.
The Group has evaluated that the impact of the new standards and determined that the impact on the statement of financial position at 30 June 2019 will be an increase in lease related assets of $291,659, and a corresponding increase in lease liabilities of the same amount on recognition of leases previously classified as operating leases. The impact on the consolidated statement of profit and loss is not material.
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Directors' Declaration
In accordance with a resolution of the Directors of Angel Seafood Holdings Limited, the Directors of the Company declare that:
1. the financial statements and notes for the year ended 30 June 2019 are in accordance with the Corporations Act2001 and:
a. comply with Accounting Standards, which, as stated in basis of preparation Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
b. give a true and fair view of the financial position as at 30 June 2019 and of the performance for the year endedon that date of the Consolidated Group;
2. in the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts asand when they become due and payable, and
3. the Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from theChief Executive Officer and Chief Financial Officer.
Tim Goldsmith Chairman
Dated this 30th day of August 2019
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Additional Information for Listed Companies
The following information is current as at 27 August 2019:
1. Shareholding
131,849,64 fully paid ordinary shares were on issue. 87,995,284 ordinary fully paid shares were quotedon ASX Limited. 43,854,356 fully paid ordinary shares are restricted and will remain unquoted until21 February 2020.
There were 567 holders of fully paid ordinary shares and 35 holders of unquoted ordinary sharesrestricted until 21 February 2020.
Other unquoted securities on issue, all of which are restricted securities until 21 February 2020, are:1,000,000 performance shares (1 holder) and 12,000,000 options (8 holders).
a. Distribution of Shareholders
b. The number of shareholders holding less than marketable parcels is 15.
c. Substantial shareholders disclosed to the Company as at 27 August 2019 are:
**The disclosed holding by Bonafide Wealth Management AG comprises 9,147,143 shares held by IFM Independent Fund Management AG as Trustee for the Bonafide Global Fish Fund and 11,943,417 shares held by Deep Blue Ventures Holdings SPC DBVF III & IV Segregated Portfolios.
d. Voting Rights
The voting rights attached to each class of equity security are as follows:Ordinary Shares:- Each ordinary share is entitled to one vote when a poll is called, otherwise each member at a meeting
or by proxy has one vote on a show of hands.Other: - Performance shares, performance rights and options do not confer upon the holder an entitlement to
vote on any resolutions proposed by the Company except as required by law.
Category (size of holding) Number of Holders of Ordinary Shares
1 - 1,000 11
1,001 - 5,000 83 5,001 – 10,000 110
10,001 – 100,000 245 100,001 – and over 118
Total 567
Shareholder Number of Ordinary Shares
Angel Oysters Pty Ltd ATF the Halman Family Trust 23,770,208
Bonafide Wealth Management AG * 21,090,560 Thorney Opportunities Limited 12,318,665
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20 Largest Shareholders – Ordinary Shares
Name Ordinary Fully Paid
Shares Held % Held of Issued Ordinary Capital
ANGEL OYSTERS PTY LTD <HALMAN FAMILY A/C> 23,770,208 18.03 J P MORGAN NOMINEES AUSTRALIA LIMITED 22,319,560 16.93 UBS NOMINEES PTY LTD 12,312,970 9.34 MR MICHAEL RICHARD PORTER + MRS PATRICIA MARY PORTER 5,525,000 4.19 MR KIRIL DENNIS BOITCHEFF + MS SUZANNE JANET BOITCHEFF <SEAVIEW SUPER FUND A/C> 5,037,750 3.82
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 3,719,196 2.82 NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C> 2,680.623 2.03 NATIONAL NOMINEES LIMITED 2,350,000 1.78 MR BRETT ANTONY WISEMAN + MS LEAH JAYNE WISEMAN <WISEMAN SUPER FUND A/C> 2,200,000 1.67 MR ANDREW JOSEPH COATES + MRS MELINDA JANE COATES <AJ & MJ COATES S/F A/C> 2,000,000 1.52
AJR MANAGEMENT SERVICES PTY LTD <AJR MANAGEMENT SERVICES A/C> 1,944,600 1.47 MRS MELINDA JANE COATES 1,500,000 1.14 MOLLYGOLD SUPERANNUATION PTY LTD <MOLLYGOLD SUPER FUND A/C> 1,500,000 1.14 MAUNSELL GLOBAL CORPORATION 1,345,000 1.02 MR BRETT WILLIAM FISHER PATON + MRS VICKI ANNE PATON <BRETT PATON FAMILY SUPER A/C> 1,241,685 0.94
MR CYRIL KOLEFF 1,037,500 0.79 MR ISAAC LEE HALMAN 1,000,002 0.76 MR ANDREW COATES 1,000,000 0.76 EVERBLU CAPITAL PTY LTD 1,000,000 0.76
JONESY’S SUPER PTY LTD <ONESY’S S/F A/C> 1,000,000 0.76
Total 94,484,094 71.67
2. The Company Secretary is Ms Christine Manuel.
3. Registered Office and Principal Place of Business48 Proper Bay RoadPort Lincoln SA 5606Ph: 0456 401 272
4. Share RegisterComputershare Investor Services – AustraliaLevel 5, 115 Grenfell StreetAdelaide SA 5000Ph: (08) 8236 2300 / 1300 850 505Website: www.computershare.com
5. Securities Exchange ListingAdmitted to the official list of ASX Limited on 21 February 2018. Quoted ordinary shares: AS1F
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